(Kitco News) – Indian gold prices rose along with international benchmarks last month, with unprecedented inflows into Indian gold ETFs and 2025 demand reaching a historic high, according to Kavita Chacko, Research Head for India at the World Gold Council (WGC).
Chacko wrote in the latest WGC update that gold is rising on the back of geopolitical uncertainty.
“Gold prices have extended their uptrend in 2026, scaling fresh record highs,” she noted. “International gold prices advanced by nearly 6% in the first 13 days of the new year, registering five new all-time highs and breaching the US$4,600/oz mark. This follows a 4.2% rise in December and a strong 67% gain during 2025, the highest annual increase since 1979.”
“Domestic gold prices have closely tracked the global rally, rising to INR139,799/10g,” she said. “The sustained uptrend has been largely driven by elevated geopolitical tensions, persistent policy uncertainty, and resilient safe-haven demand. In addition, positive momentum, reflected in the continued inflows into global gold ETFs, has further underpinned prices.”
The WGC’s feedback from the market participants and interactions with traders indicated that the domestic gold demand environment remains resilient, though measured.
“Elevated gold prices have tempered gold jewellery purchase volumes and average ticket sizes, as consumers adhere to fixed budgets and shift towards lightweight jewellery with lower making charges,” Chacko said. “While 22k gold jewellery remains the preferred choice, demand for lower purity jewellery, particularly 18k and 14k, has seen an uptick, reflecting heightened price sensitivity. Needs-based wedding purchases remain steady, providing key support to overall jewellery demand. Jewellery exchange activity continues to be robust, highlighting value-conscious consumer behaviour: some retailers report that over 40% of their jewellery sales are driven by old jewellery exchange.”
She added that retailers have adopted a cautious and disciplined approach to inventory management. “Stocking decisions are increasingly data-led and selective, with a focus on commercially efficient assortments, faster inventory churn, and design-led differentiation,” she said. “Meanwhile, investment demand remains strong and is reportedly drawing in new buyers who are attracted by the gold price momentum.”
Chacko said that listed jewellery retailers reported strong revenue growth in the final quarter of 2025, but it was largely price-led, with the 15% price increase during Q4 offsetting the decline in volume. “Plain gold jewellery reportedly recorded strong growth and gold coin sales nearly doubled year-on-year, reflecting heightened investment demand amid rising prices,” she said. “Digital and e-commerce channels also saw a sharp acceleration, with some companies reporting annual revenue growth of over 100%.”
Meanwhile, gold ETF demand reached new heights at the end of the year, with net inflows reaching an all-time high of $1.29 billion in December.
“This marked the eighth consecutive month of net additions, underscoring sustained investor demand for gold-backed funds,” she wrote. “Cumulative holdings increased by a record 8.6t in December, lifting the total to a historic high of 95t, in line with our estimates. Investor appetite was supported by muted equity market performance and sustained gold price momentum, reinforcing the role of gold ETFs as a preferred portfolio diversifier.”
Chacko said 2025 was a standout year for Indian gold ETFs. “Net inflows of INR430bn (US$4.9bn) and net demand of 37t were the highest on record, accounting for 5% of global gold ETF flows and demand,” she said. “Assets under management (AUM) of gold ETFs grew to INR1,279bn (US$14.2bn), increasing India’s share in global gold ETF AUM from 1.9% in 2024 to 2.5% a year later. Within the domestic mutual funds universe, the share of gold ETFs also increased from 0.7% to 1.6%.”
India’s ETF investor base also grew significantly in 2025, with a 60% year-over-year increase in accounts. “At the end of December, total folios reached 10.2mn, with 3.8mn new accounts added in 2025, underscoring the growing adoption of gold ETFs among investors,” she said.
Digital gold also made significant inroads last year, with purchases of digital gold through the Unified Payments Interface (UPI) increasing steadily through 2025. “Transaction values rose from INR8bn (US$88mn) in January to INR21bn (US$231mn) in December, a near three-fold increase, with an estimated 13.5t purchased over the year,” Chacko said. “Market feedback indicates that this growth has been supported by the ease of purchase, participation from a broader and newer set of buyers, and the expanding range of service providers, including jewellers and fintech platforms.”
“Activity rebounded after a brief dip in November following an advisory from the Securities and Exchange Board of India (SEBI), which noted that digital gold products are not regulated under existing market frameworks,” she added. “Transaction trends point to the growing presence of this format within the domestic gold markets, highlighting the importance of appropriate regulatory oversight.”
But even as domestic demand set all-time records, sovereign demand slid in last year’s high-price environment.
“The Reserve Bank of India’s (RBI) 2025 gold purchases fell to their lowest level in eight years, totalling just 4t; a sharp decline from the 72.6t acquired in 2024,” Chacko noted. “Despite this slowdown, the RBI’s total gold holdings stand at a record 880.2t. The substantial accumulation of gold in 2024, combined with a sharp rise in gold prices in 2025, has materially increased the share of gold in the RBI’s foreign exchange reserves – up from around 10% to 16% within a year. This underscores the role of price appreciation in strengthening reserve valuations, even with limited incremental buying.”
The WGC believes this indicates a measured approach to reserve management on the part of the RBI, “with higher gold prices and the increased share of gold in foreign exchange reserves likely influencing the pace of additional purchases.”
Turning to gold imports, Chacko wrote that value was up even as volumes dropped.
“Gold imports recorded a sequential increase in value terms during the month, although volumes are estimated to have declined due to an average 6% rise in the landed gold price,” she said. “Import value stood at US$4.1bn, marking a 3% m/m increase but a 12% y/y decline. In volume terms, imports are estimated to be in the range of 35t to 40t in December, down from the 48t imported in November. Notably, monthly imports have moderated significantly from the elevated levels seen between September and October ahead of the festive season, which averaged around 115t and US$12bn in value.”
“For the full year, the gold import bill remained broadly steady at US$59bn compared with the previous year; however, volumes declined by over 20%, largely a reflection of higher gold prices,” she added.
Looking ahead, Chacko said the WGC believes seasonal festival and wedding demand “could lend incremental support to jewellery, while investment demand is likely to remain the key driver.”
