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India’s gold demand in 2025 is poised to be shaped by a favourable monsoon and historically high gold prices, creating a contrasting push and pull in both rural and urban markets. The India Meteorological Department (IMD) has projected a 105% above-normal monsoon, particularly across key agricultural states in Central and Southern India, where rural gold demand is most pronounced.

Historically, a good monsoon has boosted farm incomes and driven higher gold jewellery consumption. This was visible in 2024, where Q3 and Q4 jewellery demand recovered sharply to 459 tonnes and 547.5 tonnes, respectively (World Gold Council), backed by strong rainfall and a robust Kharif harvest. With the 2025 monsoon progressing early and evenly, a similar boost to rural confidence is expected.

However, gold prices have entered uncharted territory. As of May 30, 2025, MCX gold is trading at ?95,200 per 10 grams, up nearly 56% year-on-year from ?61,200 in May 2024. This dramatic rise has made gold significantly less affordable for rural consumers, who typically purchase physical gold for jewellery or savings who contribute to about 55% of buyers.

In contrast, urban India is witnessing a strategic behavioural shift. High net-worth individuals and retail investors are increasingly allocating capital to non-physical gold assets. While the early onset and broad coverage of the monsoon are expected to support agricultural income and rural sentiment, the actual volume of gold jewellery purchases may face headwinds from affordability constraints. Retailers may also see increased recycling and exchange of old jewellery instead of new purchases.

Overall, gold demand in 2025 is expected to hold firm, largely matching the improved levels seen in 2024. While rural buying may be cautious, the festive and wedding-driven Q3 and Q4 cycles, along with stronger agricultural output, could still result in healthy demand. However, a greater share of urban demand is expected to shift toward investment-led gold, rather than ornamental.

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