A structural transformation is underway in India's gold buying patterns as investment demand surges while traditional jewelry purchases decline. According to a comprehensive report by CareEdge Ratings, the share of jewellery consumption fell below 60% of total gold purchases in CY25, compared to the long-term average of 70%, representing a significant shift in consumer behavior. As reported by Fortune India, the share of investment in overall gold consumption rose to 42% in CY25 from 29% in CY24, reflecting a decisive tilt toward gold as a financial asset amid global uncertainty. The report highlights that geopolitical uncertainty, momentum in gold prices and portfolio diversification preferences are expected to continue fuelling investment demand, with investment share projected to reach 35-40% in FY27. This trend is visible globally as well, with jewellery's share declined sharply to 33% in CY25, well below the 15-year average of around 50%, as high prices curbed discretionary purchases.
Investment demand in India has surged to record highs, driven mainly by gold exchange-traded funds (ETFs), bars, and coins. The report projects this trend to continue, with investment share expected to reach 35-40% by FY27. Globally, gold investment demand touched a record 2,175 metric tonnes in CY25, surpassing the previous high of 1,805 MT in CY20, with ETF investments alone contributing over 800 MT. As per Fortune India, investors added 37.5 tonnes in CY25, exceeding the cumulative investment of the previous decade. ETRetail reports that investment demand surged to record levels in India led by gold ETFs (exchange traded funds) and bar-and-coin buying, reflecting safe-haven demand among other factors. HomeStocksNews reports that worldwide, demand for gold bars and coins jumped 74% in FY2025 and another 60% in the first half of FY2026. Gold ETFs worldwide contributed over 800 metric tonnes, while total global investment demand reached 2,175 metric tonnes, higher than previous record levels. As per ANI, this growth is supported by central bank buying, geopolitical tensions, and global economic uncertainty.
Despite the shift toward investment gold, jewelry consumption in India has not collapsed, with Indians spending around ₹4.8 lakh crore on jewellery in CY25, up about 10% year-on-year, indicating a higher wallet share allocation even as prices hit record highs. However, the volume of jewelry sold fell by around 15% during the year, reflecting price sensitivity among consumers and a shift toward lighter and lower-carat jewellery. According to Fortune India, over CY21–CY25, jewellery spending grew at a compound annual growth rate (CAGR) of 11%. This poses challenges for jewelers, who face limits on revenue growth and need to adjust their products. However, organized jewellers are expected to benefit from this changing trend, with CareEdge's sample of six large listed players projected to post revenue growth of around 35% year-on-year in FY26, followed by 20-25% growth in FY27. The expansion will be driven by continued store additions, market share gains amid sector formalisation, and steady consumer demand.
Digital gold, gold ETFs, and sovereign gold bonds now offer investors access to gold investments without the traditional constraints of physical storage and safety concerns. These digital formats allow for regular, small investments while reducing storage and safety concerns that previously limited gold accessibility. As reported by ABP Live, these options provide investors with greater flexibility to include gold in their financial plans as recurring investments rather than one-time purchases, enabling the transition from occasional large purchases to more structured investment approaches.
Gold prices have entered a period of sustained high levels, supported by basic demand trends rather than short-term speculation, according to CareEdge Ratings. Analysts expect gold prices to stay high, with major institutions projecting $5,400 to $6,300 per ounce by the end of 2026. This sustained high pricing is backed by strong central bank buying, which has exceeded 1,000 tonnes annually in recent years and continued through 2025. The Reserve Bank of India has greatly increased its gold holdings, making up about 17% of its foreign exchange reserves. However, the agency feels gold prices have entered a more durable high-price regime supported not by short-term speculative flows but by structural demand shifts, sustained official sector buying and persistent global macroeconomic and geopolitical uncertainty. However, significant risks remain as relying heavily on gold as an investment, especially at these high prices, brings risks. A stronger US dollar or unexpected interest rate hikes by major central banks could lower gold's appeal, while economic downturns or an end to global conflicts could cause prices to drop sharply.
