India’s Gold Demand Falls 16% as Record Prices Hit Jewellery Sales

India’s love affair with gold hit a pause this quarter. The World Gold Council (WGC) reported on Thursday that the country’s total gold demand fell sharply by 16% in the July-September period of 2025, as record-high prices discouraged jewellery buyers, even though investors rushed to the metal as a safe haven.

Jewellery Buyers Step Back Amid Soaring Prices

Gold prices in India soared to historic highs during the third quarter, crossing Rs 73,000 per 10 grams in August. This surge made many consumers postpone or reduce purchases, particularly during the wedding and festival seasons that traditionally drive demand.

According to the World Gold Council, gold jewellery demand dropped 31% to 117.7 tonnes, down from 171.6 tonnes a year earlier. However, the total value of jewellery sales remained steady at about Rs 1,14,270 crore as customers adjusted to higher price levels, opting for lighter pieces or reusing old jewellery.

Analysts say high gold prices have altered consumer behavior. “Families are more cautious now. Many are waiting for price corrections before making big-ticket jewellery purchases,” said a Mumbai-based bullion dealer. The festive period, usually marked by strong buying during Raksha Bandhan and Navratri, saw subdued footfall this year.

Investment Demand Shines Despite Market Uncertainty

While jewellery sales stumbled, investment demand displayed remarkable strength, highlighting gold’s enduring appeal as a store of value amid global economic uncertainty.

The WGC report showed that investment demand grew 20% by volume to 91.6 tonnes, while in value terms, it jumped 74% to Rs 88,970 crore from Rs 51,080 crore a year ago. This sharp rise came as investors sought refuge in gold amid volatile equity markets and concerns over inflation and geopolitical tensions.

“Retail investors see gold as a hedge against uncertainty,” said a senior market strategist at a leading investment firm. “The surge in gold-backed exchange-traded fund (ETF) inflows this quarter reflects growing risk aversion.”

Key Highlights from WGC Q3 2025 Report

Data Source: World Gold Council (Released October 2025)

Value of Gold Demand Rises Despite Volume Drop

Interestingly, while total physical demand fell, the value of India’s gold consumption surged 23% to Rs 2,03,240 crore from Rs 1,65,380 crore last year. This paradox underscores the impact of higher gold prices, which have nearly doubled in the past three years.

Economists point out that this price-driven value rise indicates resilience in India’s appetite for gold, even when physical demand slows. The higher value of transactions also suggests that consumers and investors continue to prioritize gold as a long-term wealth-preserving asset.

India remains the world’s second-largest consumer of gold after China, accounting for nearly a quarter of global jewellery demand. Yet, domestic dynamics — including import duties, inflation, and the rupee’s weakness against the dollar — have played a key role in pushing up local prices.

Rural Demand Weakens as Incomes Stay Under Pressure

Rural India, which drives a large share of the country’s gold jewellery consumption, also faced headwinds this quarter. Erratic monsoons and rising costs have squeezed disposable incomes in key agricultural regions, reducing spending on non-essential goods, including gold ornaments.

“Rural demand has been under stress for months,” said a bullion analyst in Chennai. “High prices have made it harder for rural buyers to participate in traditional gold purchases, especially for weddings and festivals.”

Jewellers across tier-2 and tier-3 cities reported softer sales and a shift toward lighter designs or gold-plated alternatives. This shift reflects the growing price sensitivity among middle-income buyers.

Global and Local Factors Keep Outlook Mixed

Globally, gold prices have remained elevated amid central bank buying, geopolitical tensions, and expectations of prolonged high interest rates in major economies. The World Gold Council noted that these factors, coupled with a weak rupee, have amplified the impact on Indian buyers.

However, the council expects a rebound in demand in the final quarter of 2025, driven by the Diwali and wedding seasons. If prices stabilize, retailers anticipate a moderate recovery in sales volumes, although sustained high rates could still deter price-sensitive consumers.

“The long-term fundamentals for India’s gold demand remain strong,” said a WGC spokesperson. “Cultural affinity, rising incomes, and increasing financial awareness will continue to support gold consumption in both jewellery and investment forms.”

Still, the short-term outlook depends heavily on price movements and global sentiment. A significant drop in international prices or a stable rupee could reignite consumer interest.

What It Means for Consumers and Markets

For everyday buyers, the message is clear: gold remains expensive, but its investment appeal is growing. Financial planners suggest that investors should balance their portfolios, using gold as a hedge rather than a speculative asset.

• Consumers planning jewellery purchases may benefit from monitoring global price trends before the year-end festive rush.

• Long-term investors could find opportunities in systematic investment plans (SIPs) in gold ETFs or sovereign gold bonds.

Gold’s dual identity as both adornment and investment has once again shaped India’s market story this quarter — reminding that even in times of slowdown, the metal’s glitter rarely fades completely.

As the festival season nears and prices show signs of cooling slightly, all eyes will be on whether Indian households return to their age-old gold-buying traditions with renewed vigor.

India’s gold market continues to capture global attention, blending cultural sentiment with financial strategy in a way no other asset class does. The next quarter will reveal whether this slowdown is a temporary pause or the start of a deeper shift in consumption patterns.