(Kitco News) – While Indian gold jewelry sales suffered from seasonal weakness and bullion imports fell to a 14-month low in June, strong retail revenues and standout investment demand are supporting the overall market, according to Kavita Chacko, Research Head for India at the World Gold Council (WGC).
Chacko wrote in the latest WGC update that gold prices lost momentum toward the end of June as they eked out a modest month-over-month gain of 0.3%. “Earlier in the month, prices were supported by a weaker dollar, heightened geopolitical tensions, softer US Treasury yields, and increased inflows into gold ETFs,” she noted. “However, growing risk-on sentiment among investors capped any further upside.
Renewed trade tensions have since pushed gold prices higher in July, with the yellow metal already gaining 2% this month.
“Gold’s year-to-date performance stands out, with prices up 28% in USD terms,” she said. “Domestically, gold prices largely tracked international trends, ending June up 0.7% at INR 95,676/10g. So far in July, prices have gained an additional 1%, reaching INR97,095/10g.”
But high prices continue to hurt demand for gold jewelry. “Jewellery demand succumbed to seasonal weakness in June and early July, following the conclusion of the wedding season,” Chacko wrote. “Persistently high gold prices further suppressed demand, prompting consumers to defer non-essential purchases and opt for more affordable alternatives such as lightweight, lower-carat, or studded jewellery.”
“The trend of exchanging old jewellery to manage costs continued to gain traction as per market reports,” she added. “Meanwhile, the shift toward investment-oriented buying persisted, with a growing preference for gold bars, coins and plain gold chains (seen as quasi-investments), which are favoured for their lower fabrication charges. As per anecdotal reports, demand has been concentrated in lower-grammage coins, particularly those weighing less than 10g.”
But despite the lower volumes, high prices combined with demand from weddings and key festivals still boosted the industry’s quarterly profits.
“Leading listed gems and jewellery companies delivered a strong performance in the April–June quarter, reporting a y/y revenue growth between 18% and 31%,” Chacko said. “This growth was largely price-led even as volumes remained flat or moderated. A ~32% y/y rise in gold prices during the quarter and key festivals and wedding demand during April-May boosted sales revenue.”
She noted that studded jewelry continued to gain traction as a way for consumers to mitigate high prices while digital channels and franchises saw strong expansion. “Store expansion continued, with corporate retailers adding between two to 19 new outlets during the quarter, increasing footprint of organised players in the sector,” she said.
Investment demand was very strong last month, with gold ETF inflows approaching record levels.
“Indian gold ETFs saw a significant surge in inflows during June, outpacing peers across Asia and, likely driven by elevated geopolitical tensions in the Middle East which reinforced gold’s traditional resilient and strategic asset attributes,” Chacko wrote. “Net inflows soared to INR20.8bn (US$242mn), the highest monthly inflow since January 2025 and the second-largest on record, broadly in line with our initial estimated flows. This momentum has continued into July, with healthy inflows recorded in the first 10 days of the month.”
She noted that cumulative assets under management in Indian gold ETFs rose to $7.5 billion – an 88% year-over-year increase – with total gold holdings reaching 66.7 tonnes, including two tonnes added in June alone and nine tonnes in the first half of 2025 – the largest semiannual increase on record.
“Investor participation also remained strong, with 280k new accounts (or folios) opened during the month (27% m/m and 41% y/y rise), taking the total number of accounts to 7.65mn,” Chacko said. “The expanding investor base underscores the growing strategic role of gold in Indian portfolios.”
On the sovereign front, the Reserve Bank of India also resumed bullion buying last month, adding 0.4 tonnes for its first purchase since March.
“With this, India’s gold reserves have risen to an all-time high of 880t,” she noted. “However, the pace of gold accumulation has slowed in 2025 compared to previous years. In the first half of the year the RBI added just 3.8t, the lowest H1 tally in six years and a steep drop from 37.1t in H1 2024, when monthly purchases averaged 6.1t. The pullback likely reflects a more measured approach by the RBI, possibly influenced by the sharp rise in global gold prices.”
Even with the slower pace of purchases, however, gold’s share in India’s foreign exchange reserves has grown significantly. “It now accounts for 12.1% of total reserves, up from 8.7% a year ago, the highest proportion on record.”
High prices are also having a big impact on bullion imports, which fell dramatically in both monthly and annual terms.
“Gold imports in June dropped to their lowest level in 14 months, extending the decline for a third consecutive month,” Chacko said. “At US$1.8 billion, imports were down 26% y/y and 28% m/m. Our estimates suggest that the volume of gold imported in June ranged between 19t to 24t, a significant drop from the 31t recorded in May. Persistently high prices have pressured demand, which has subsequently held back imports.”
Looking ahead, Chacko said that the upcoming festive season should drive a recovery in jewelry demand beginning in mid-August, and investment buying is expected to remain strong in the weeks ahead.
