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Record Gold Prices Affect Jewellery Demand in India, Fuel Investment Demand: World Gold Council

Updated: April 30, 2025 13:32

Image Source: BullionStar
The World Gold Council (WGC) has pointed out the two-pronged effect of record gold prices on India's gold market. While jewellery demand is likely to fall due to affordability issues, investment demand for gold is seeing a major surge. Here's a detailed summary:
 
Key Highlights:
 
Effect on Jewellery Demand:
 
Record gold prices have subdued consumer spending, causing the sale of jewels to slow.
 
The steep price of gold has made it relatively unaffordable for conventional purchasers, especially wedding and festive period.
 
Increase in Investment Demand:
 
Investment appetite for gold has picked up with higher inflows into gold exchange-traded funds and investment in gold coins and bars.
 
Investors have been flocking to gold as a safe asset during economic risks and inflation fears.
 
Market Forces:
 
Domestic gold prices have scaled historic peaks, following international movements and the fall of the Indian Rupee.
 
Domestic traders are providing deeper discounts to encourage consumers, but the general demand for jewelry is still not buoyant.
 
Central Bank Activity:
 
The Reserve Bank of India (RBI) has again started buying gold, adding to the reserves and supporting the general demand.
 
Future Outlook:
 
The WGC anticipates investment demand to be sustained, with jewellery demand recovering if price stability is maintained.
 
The year-end dynamics of finance, with tax-saving investments, may also play a role in shaping gold demand patterns.
 
This release highlights the changing dynamics of India's gold market and emphasizes the differential trends in jewellery and investment demand.
 
Sources: World Gold Council, Gold Focus Blog, Firstpost
 

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