Global gold demand reached an all-time high in CY25, increasing by approximately 8% year-on-year to nearly 5,000 metric tonnes. This growth was primarily driven by strong investment demand, even as gold prices surged and macroeconomic conditions remained challenging.
Central banks continued their aggressive gold accumulation for the fourth consecutive year, reinforcing gold’s importance as a strategic reserve asset amid ongoing geopolitical uncertainty and diversification needs.
Shift in Gold Consumption Patterns
The composition of global gold consumption has undergone a structural transformation. Jewellery demand dropped significantly to around 33% in CY25, well below its long-term average of 50%, as consumers adjusted to elevated gold prices by reducing discretionary purchases.
A similar trend is visible in India, where jewellery consumption fell below 60% of total gold purchases compared to its historical average of approximately 70%.
Investment Demand Surges in India and Globally
Investment demand has emerged as the dominant driver of gold consumption growth. Globally and in India, there has been a sharp rise in gold ETFs, bar, and coin purchases, reflecting safe-haven demand, diversification strategies, and heightened geopolitical concerns.
In India, the investment share in total gold consumption surged to 42% in CY25, up from 29% in CY24, marking a significant behavioural shift among consumers.
Gold Prices Enter a Structural High Phase
Gold prices have moved into a sustained high-price regime, supported not by short-term speculative activity but by long-term structural demand, continued central bank buying, and persistent global uncertainties.
Unlike previous cycles, the current rally reflects deeper macroeconomic factors, including currency instability concerns, declining real yields, and global economic fragmentation.
Indian Jewellery Demand Remains Value-Resilient
Despite record-high prices, Indian jewellery demand has remained resilient in value terms. Jewellery purchases rose approximately 10% year-on-year to ₹4.8 lakh crore in CY25, indicating consumers’ willingness to allocate a higher share of spending towards gold.
However, in volume terms, demand declined by around 15%, highlighting price sensitivity. Consumers increasingly preferred lower-carat and lightweight jewellery while postponing discretionary purchases.
Strong Growth Outlook for Branded Jewellers
Branded jewellery retailers are expected to witness strong growth momentum. CareEdge Ratings projects revenue growth of around 35% in FY26 and 20–25% in FY27, driven by aggressive store expansion and continued sector formalisation.
Margins are expected to expand by 250–300 basis points in FY26 due to inventory gains, although normalisation is anticipated in FY27.
Global Trends Supporting Gold Demand
Several structural factors continue to support gold demand:
- Central banks purchased 863 metric tonnes of gold in CY25, maintaining historically high levels
- Global gold ETF holdings increased by 801 metric tonnes, the second-highest on record
- Bar and coin demand reached a 12-year high
- Investment demand rose to a record 2,175 metric tonnes globally
These trends underline gold’s growing role as a strategic financial asset rather than just a consumption-driven commodity.
Changing Consumer Behaviour in India
Indian consumers are increasingly treating gold as an investment asset rather than purely ornamental. This shift is reflected in:
- Rising ETF investments, with 37.5 tonnes added in CY25
- Higher allocation towards bullion and coins
- Increased focus on wealth preservation and diversification
At the same time, jewellery purchases remain culturally significant, especially during festivals and weddings, though buying patterns are becoming more value-conscious.
Retail Expansion and Inventory Dynamics
Jewellery retailers continue to expand their footprint, with approximately 310 new stores added in FY26. However, expansion rates have moderated compared to previous years, reflecting a more cautious growth approach.
The franchisee model remains dominant, accounting for around 62% of total retail presence, helping reduce inventory funding pressure.
Inventory holding periods have increased to 207 days in H1FY26, driven by rising gold prices and store expansion. Despite this, reliance on debt has slightly reduced due to stronger internal accruals and franchise-led growth.
Future Outlook: Structural Shift to Continue
According to CareEdge Ratings, the shift in gold consumption patterns is expected to persist:
“Domestic organised jewellery retailers are expected to report revenue growth of over 35% year‐on‐year in FY26, driven by steady consumer appetite for jewellery despite rising gold prices, market‐share gains from accelerated sector formalisation and planned store additions. This momentum is likely to continue in FY27, with revenue growth projected at 20–25% year‐on‐year. Operating profit margin is also likely to expand by 180-200 bps in FY26 supported by inventory gains, which is likely to normalise to 6.5-7% in FY27 led by expectations of range-bound gold prices and front-loaded operating expenses on new stores.” says Raunak Modi, Assistant Director, CareEdge Ratings.
Akhil Goyal, Director, CareEdge Ratings says, “Gold consumption patterns are witnessing a structural shift, with jewellery accounting for less than 60% of India’s total gold purchases in CY25, compared to a long-term average of ~70%. Geopolitical uncertainty, momentum in gold prices and portfolio diversification preferences are expected to continue fuelling investment demand for gold, with its share in overall gold consumption is projected at 35-40% in FY27.”
