Soaring Gold Prices Hit Indian Jewellery Demand in Q1 by Amit Gupta, Kedia Advisory
India’s gold demand dropped 15% year-on-year to 118.1 tonnes in Q1 2025, despite a 22% rise in value to Rs.94,030 crore, driven by record-high gold prices nearing Rs.1 lakh per 10 grams. Jewellery demand saw a sharp 25% decline, touching a five-year low at 71.4 tonnes. However, investment demand rose 7% to 46.7 tonnes, as investors sought a safe haven amid global financial uncertainties. Recycling fell 32% as consumers anticipated further price hikes. Global demand rose 1% to 1,206 tonnes, supported by ETF inflows and continued central bank buying. Retailers remain optimistic due to upcoming festivals and the wedding season, which may keep demand stable despite high tariffs and prices.
Key Highlights
* Gold demand in India dipped 15% to 118.1 tonnes.
* Jewellery demand fell 25%, hitting a five-year low.
* Gold prices surged to Rs. 79,633 per 10 grams in Q1.
* Investment demand rose 7% amid market uncertainty.
* Global gold demand up 1% due to ETF and central banks.
India witnessed a 15% decline in gold demand during the January–March quarter of 2025, falling to 118.1 tonnes compared to 139 tonnes a year ago. This sharp drop was largely triggered by surging gold prices, which soared 44% year-on-year to an average of Rs.79,633 per 10 grams, nearing the psychological mark of Rs.1 lakh. In value terms, however, demand rose 22% to Rs.94,030 crore, reflecting the impact of price gains.
The spike in prices significantly hit jewellery consumption, which dropped 25% to 71.4 tonnes — its lowest level since 2020. However, the value of jewellery sales still managed an 8% increase to Rs.56,880 crore, indicating a shift toward lighter or more affordable pieces. With festivals like Akshaya Tritiya and the wedding season approaching, cultural significance continues to buoy sentiment despite affordability concerns.
Investment demand remained strong, rising 7% to 46.7 tonnes, driven by market volatility and interest in gold bars, coins, ETFs, and digital gold. The metal's safe-haven appeal proved attractive amidst global financial uncertainties. Meanwhile, gold recycling fell 32% to 26 tonnes, as consumers preferred to hold onto gold in hopes of further price increases.
Gold imports rose 8% to 167.4 tonnes in anticipation of festive and wedding-related demand. On a global level, gold demand reached 1,206 tonnes, up 1% year-on-year — the highest Q1 level since 2019. This was bolstered by strong investment inflows and central banks adding 244 tonnes to reserves.
Finally,
Despite record prices suppressing jewellery demand, gold’s enduring cultural and investment appeal continues to support Indian and global demand, with upcoming festivals expected to provide a boost.
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