India's Gold Market Shifts Towards Investment Demand Amid Rising Uncertainties

India's gold market has undergone significant changes in recent years, driven by both traditional and modern factors. On one hand, gold continues to be a symbol of prosperity and wealth in Indian culture, particularly during festivals and weddings. However, on the other hand, rising global uncertainties have led to an increase in investment demand for gold, with bars, coins, and exchange-traded funds (ETFs) becoming increasingly popular.

According to World Gold Council data, India's overall gold demand was up 2% year-on-year to 282 tonnes in the first half of this year, driven by investment demand. In contrast, jewellery demand declined by 17.1% to 141.2 tonnes, with investment demand accounting for 70% of total gold demand.

The shift towards investment instruments such as ETFs has been particularly notable, with Indian gold ETFs hitting a record high in Q1 this year. The Reserve Bank of India (RBI) also stepped up its purchases of gold in 2025, which helped cushion the impact of rupee depreciation and strengthened India's external balance.

However, jewellery demand has been constrained by elevated prices, higher import duties, and seasonally subdued buying. Domestic MCX spot gold prices were flat in Q2FY27, but remained substantially higher than a year earlier. The rising popularity of investment gold comes as the government continues to explore ways to mobilize idle household gold through schemes such as the Gold Monetisation Scheme.