India’s gold demand fell 16% YoY in the July–September 2025 quarter to 209.4 tonnes, according to industry reports. Even though people bought less gold by weight, the total value of demand rose 23% because gold prices hit record highs. The trend shows that while buyers are purchasing smaller quantities, they are paying a lot more for it.
The main reason behind this fall is a big drop in jewellery demand, which went down about 31% to 117.7 tonnes. People were discouraged by very high gold prices, choosing either to delay wedding or festive purchases or to buy lighter jewellery instead of heavy sets. On the other hand, investment demand for gold, in the form of bars and coins, rose nearly 20% to 91.6 tonnes. In value terms, this segment touched around ₹88,970 crore, a strong 74% jump from last year.
This shift tells an important story. Indian households still see gold as a safe-haven asset, but they are now buying it more for investment than for adornment. When prices rise quickly, people tend to view gold less as a decorative item and more as a financial shelter. This is similar to what happens during economic uncertainty, investors rush to assets that hold value even when markets fall.
For the domestic jewellery industry, this changing behaviour could create pressure. Jewellers may see fewer walk-ins or smaller ticket sizes, which could hurt their margins. As input costs rise and buyers switch to lighter pieces, companies in gold jewellery manufacturing and retail might face slower growth unless prices cool down.
At the same time, the increase in investment demand can open up opportunities in other areas. Gold-linked funds, digital gold platforms, and bullion traders could benefit as more people buy gold purely for wealth preservation. For financial investors, this also reinforces gold’s position as a diversification tool in portfolios, especially when equity markets turn volatile or interest rates fluctuate.
The import data also reflects the changing pattern. India’s gold imports fell 37% year-on-year to about 194.6 tonnes, down from 308 tonnes a year earlier. This drop in physical volumes has implications for the country’s trade balance and import duties, since gold is one of India’s largest import items.
Meanwhile, the average gold price in the country rose about 46% over the year, reaching nearly ₹97,075 per 10 grams (excluding import duty and GST). Such a steep rise makes it harder for consumers to afford jewellery and explains the demand slowdown.
Looking ahead, analysts say the upcoming festive and wedding season (Q4 FY26) might bring some recovery in jewellery buying. However, if prices stay high or climb further, the revival could remain limited. Consumers may continue focusing on smaller or lower-carat products, while investment demand is expected to stay strong.
For investors, there are two contrasting signals. The jewellery business could face short-term risk due to weaker volume sales and higher input costs. But the investment gold ecosystem, from exchange-traded products to physical bars, may see higher participation.
Overall, the July–September 2025 quarter shows a clear shift in the structure of India’s gold market: less physical jewellery buying, more investment buying, and record-high prices shaping consumer behaviour. Whether the upcoming festive quarter can reverse this trend will depend largely on price stability and consumer sentiment.