Gold prices in India rose last month in line with strong gains in global markets, driven by unprecedented inflows into gold exchange-traded funds (ETFs), as demand in 2025 reached a historic high, according to Kavita Chacko, Head of Research for India at the World Gold Council (WGC).
In the latest WGC update, Chacko said gold’s rally is primarily being fueled by heightened geopolitical uncertainty.
“Gold prices have extended their uptrend in 2026, reaching fresh record highs,” Chacko said. “International gold prices advanced by nearly 6% during the first 13 days of the year, registering five new all-time highs and breaching the US$4,600 per ounce level. This follows a 4.2% increase in December and a strong 67% gain in 2025, the highest annual rise since 1979.”
She added that domestic gold prices in India closely tracked the global rally, climbing to INR 139,799 per 10 grams. According to Chacko, the sustained uptrend has been largely driven by elevated geopolitical tensions, persistent policy uncertainty, and resilient safe-haven demand, alongside continued positive momentum from ongoing inflows into global gold ETFs.
Resilient but measured demand
Feedback from market participants and interactions with traders indicate that India’s domestic gold demand environment remains resilient, though measured, the WGC said.
“Elevated gold prices have tempered jewellery purchase volumes and average ticket sizes, as consumers adhere to fixed budgets and increasingly shift toward lightweight jewellery with lower making charges,” Chacko noted. “While 22-carat gold jewellery remains the preferred choice, demand for lower-purity jewellery—particularly 18-carat and 14-carat—has increased, reflecting heightened price sensitivity.”
She added that needs-based wedding purchases have remained steady, providing key support to overall jewellery demand. Jewellery exchange activity has also stayed robust, highlighting value-conscious consumer behavior, with some retailers reporting that more than 40% of jewellery sales are driven by old jewellery exchanges.
Disciplined inventory management and strong investment demand
Chacko said jewellery retailers have adopted a cautious and disciplined approach to inventory management, with stocking decisions increasingly data-led and selective, focusing on commercially efficient assortments, faster inventory turnover, and design-led differentiation.
Meanwhile, investment demand remains strong, reportedly attracting new buyers drawn by gold’s price momentum.
Listed jewellery retailers reported strong revenue growth in the final quarter of 2025; however, this growth was largely price-led, with a 15% price increase during Q4 offsetting the decline in volumes. Plain gold jewellery recorded strong growth, while gold coin sales nearly doubled year-on-year, reflecting heightened investment demand amid rising prices. Digital and e-commerce channels also saw sharp acceleration, with some companies reporting annual revenue growth exceeding 100%.
Gold ETFs hit record levels
Gold ETF demand in India reached new highs toward the end of the year, with net inflows of US$1.29 billion in December, marking the eighth consecutive month of net additions.
“This underscores sustained investor demand for gold-backed funds,” Chacko said. “Cumulative holdings increased by a record 8.6 tonnes in December, lifting total holdings to a historic high of 95 tonnes, in line with our estimates. Investor appetite was supported by muted equity market performance and continued gold price momentum, reinforcing the role of gold ETFs as a preferred portfolio diversifier.”
She described 2025 as a standout year for Indian gold ETFs, with net inflows of INR 430 billion (US$4.9 billion) and net demand of 37 tonnes, the highest on record. These flows accounted for 5% of global gold ETF flows and demand. Assets under management (AUM) rose to INR 1.279 trillion (US$14.2 billion), increasing India’s share of global gold ETF AUM from 1.9% in 2024 to 2.5% in 2025. Within the domestic mutual fund universe, gold ETFs’ share increased from 0.7% to 1.6%.
India’s gold ETF investor base also expanded significantly in 2025, with the number of accounts rising 60% year-on-year. By the end of December, total folios reached 10.2 million, with 3.8 million new accounts added during the year, highlighting the growing adoption of gold ETFs among Indian investors.
Digital gold gains momentum
Digital gold also made significant inroads during 2025, with purchases via the Unified Payments Interface (UPI) rising steadily throughout the year. Transaction values increased from INR 8 billion (US$88 million) in January to INR 21 billion (US$231 million) in December—nearly a threefold increase—with an estimated 13.5 tonnes of digital gold purchased over the year.
Chacko said market feedback suggests this growth has been driven by ease of purchase, participation from a broader and newer set of buyers, and an expanding range of service providers, including jewellers and fintech platforms.
Activity rebounded after a brief dip in November following an advisory from the Securities and Exchange Board of India (SEBI), which noted that digital gold products are not regulated under existing market frameworks. Transaction trends point to the growing presence of digital gold within India’s domestic gold markets, underscoring the need for appropriate regulatory oversight.
Central bank buying slows
Despite record domestic demand, sovereign gold demand declined in the high-price environment. Chacko noted that the Reserve Bank of India (RBI) purchased just 4 tonnes of gold in 2025, the lowest level in eight years, down sharply from 72.6 tonnes in 2024.
Even so, the RBI’s total gold holdings rose to a record 880.2 tonnes. The sharp accumulation in 2024, combined with the significant rise in gold prices in 2025, increased gold’s share in India’s foreign exchange reserves from around 10% to 16% within a year, highlighting the role of price appreciation in strengthening reserve valuations even with limited incremental buying.
The WGC said this reflects a measured approach to reserve management, with higher gold prices and the increased share of gold in foreign exchange reserves likely influencing the pace of additional purchases.
Imports: higher value, lower volumes
Turning to gold imports, Chacko said import values rose sequentially even as volumes declined, due to an average 6% increase in landed gold prices.
Gold import value stood at US$4.1 billion in December, up 3% month-on-month but down 12% year-on-year. In volume terms, imports were estimated at 35–40 tonnes, compared with 48 tonnes in November. Monthly imports have moderated significantly from the elevated levels seen between September and October ahead of the festive season, which averaged around 115 tonnes and US$12 billion in value.
For the full year, India’s gold import bill remained broadly steady at around US$59 billion, while volumes declined by more than 20%, largely reflecting higher gold prices.
Outlook
Looking ahead, Chacko said seasonal demand linked to festivals and weddings could provide incremental support to jewellery demand, but emphasized that investment demand is likely to remain the key driver of India’s gold market in the period ahead.
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