India’s Love Affair with Gold: Investment Demand Rises 40% of Consumption in CY25

In the latest news that further establishes India as the destination for gold, the data issued by CareEdge Ratings demonstrated the countrys never-ending love for the yellow metal with a record investment surge of approximately 40% of overall consumption in Calendar Year 2025. This is arguably the highest in recent times. The ETF inflows alone added 37.5 tonnes, surpassing the combined investment of the last ten years. According to the ratings agency, geopolitical uncertainty and record prices made people quickly move away from jewellery.

Investment Demand Continues to Remain Robust at 35-40% in FY27

Investment demand continues to remain strong at 35-40% of overall gold consumption in FY27. Factors contributing to this buoyant demand include continued portfolio diversification, central bank purchase of the yellow metal, and sustained uncertainty around macroeconomics, according to Care Edge Ratings Director Akhil Goyal. Despite intermittent volatility, gold prices are estimated to trade in a higher range throughout 2026.

A Change in India‘s Gold Consumption Mix

India’s gold consumption mix is reshaping fast in the changing market dynamics. The share of jewellery in gold purchases has fallen from the historic 70% to less than 60% in CY 2025. Jewellery demand, on the other hand, grew 10% annually to reach INR 4.8 lakh crore (value terms). However, volume fell 15% as consumers switched to lighter, lower-carat pieces due to high prices.

How Much Revenue Will Retail Jewellers Have in FY26?

Large and listed retail jewellers are estimated to record revenue growth of nearly 35% annual growth in FY26. The projected growth is attributable to store additions and market share gains by virtue of sector formalization, according to another expert at CareEdge Ratings. However, the growth will moderate to 20-25% in FY27. Their gross margins are estimated to grow 170-200 basis points in FY26 on inventory gains from unhedged gold. The margins will, however, fall to 14-14.5% in FY27, according to the rating agencys estimates. EBITDA margins are estimated to range around 6.5-7% in FY27 due to the front-loaded costs from new stores.

Around 62% of the overall retail stores are estimated to have been operating on a franchise model in FY26, a rise of more than 2% from below 60% in FY23.

Silver Gains Traction, But Can‘t Replace Gold

Even though younger buyers and select organized retailers have found interest in silver, the love for gold is not going to be over anytime soon. Despite the price surge and falling currency, India continues to import gold to meet its domestic requirements. According to news reports, India’s projected gold import for FY26 hit a record high of USD 71.98 billion despite lower volumes.

Key Takeaways

Indias gold market is undergoing a clear structural shift, not a decline. While high prices and global uncertainties have nudged consumers away from heavy jewellery toward investment-led buying, overall demand for gold remains resilient. The rising share of ETFs, portfolio diversification, and central bank accumulation show that gold is increasingly being viewed as a strategic financial asset rather than just a cultural purchase.

At the same time, the industry is adapting—retail jewellers are expanding, formalization is improving, and lighter, lower-carat jewellery is gaining traction. Even though silver is attracting some attention, it still cannot challenge gold‘s dominance in India’s psyche or portfolio strategy. Looking ahead, with sustained macroeconomic uncertainty and strong investor interest, gold is expected to retain its premium status, with demand patterns continuing to evolve rather than weaken.

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