Each year on Dhanteras, the first day of the five-day Diwali festival, Prashant buys a small quantity of gold—10 grams until recently, and just 5 grams this year—as a token of good fortune and an investment for his daughter’s wedding. He refuses to break the tradition despite the prohibitive prices. “Gold prices have been going up every year, and I feel they’ll rise more. It’s difficult to buy large quantities, so I pick up small amounts whenever I can,” he says.
Prashant’s sentiment is shared by millions of Indians who see gold as more than a metal—it is security, legacy and auspiciousness rolled into one. Even at all-time highs, the country’s fascination with gold shows no sign of fading.
Over the past year, gold prices have been on an unprecedented gallop. In the domestic market, they hit Rs1,34,800 for 10 grams on October 17, after notching 48 all-time highs in 2025 alone. Internationally, gold broke past $4,300 an ounce earlier this month—up more than 50 per cent since January. It was the strongest annual performance since 1979, when prices more than doubled.
It has been a remarkable run. The jump from $3,500 to $4,000 an ounce took just 36 days, whereas earlier $500 increments typically took three years. In India, the surge is sharper—nearly 66 per cent in a year till Diwali—amplified by the rupee’s 3.8 per cent depreciation against the dollar.
The price shock has not stopped festive buying. Jewellers say customers are purchasing smaller quantities but spending more overall. “While we expect around 20–25 per cent value growth in jewellery sales compared to last year, there has been a 12–15 per cent dip in volumes. Buyers are prioritising design and emotional value over quantity,” says Suvankar Sen, managing director and CEO of Senco Gold and Diamonds.
Pankaj Arora, national president of the All India Jewellers and Goldsmith Federation, says gold and silver trade around Dhanteras alone likely exceeded Rs60,000 crore, with Delhi’s bullion market clocking Rs10,000 crore in sale—a 25 per cent rise year-on-year.
And the wedding season remains immune to price shocks. “Families with weddings planned for 2026 are buying early to lock in current prices before they rise further,” says an official at the All India Gem and Jewellery Domestic Council.
India’s gold imports—which meet most of the domestic demand—jumped 77 per cent month-on-month in September to $9.16 billion, a ten-month high. In volume terms, imports surged to 104 tonnes, up from 65 tonnes in August, according to the World Gold Council.
A cocktail of factors has driven gold’s record rally in 2025. Geopolitical tensions—from the Russia-Ukraine war to the conflict in the Middle East—have stoked uncertainty. Trade wars have added fuel. President Donald Trump’s 100 per cent tariffs on Chinese imports on top of the existing 30 per cent duties and China’s export curbs on rare earth metals have further rattled markets.
Meanwhile, the US government’s debt has crossed $37 trillion, prompting expectations that the Federal Reserve will continue cutting interest rates after its September 25-basis-point reduction. Lower real yields have made gold more attractive.
“Exacerbated geopolitical tensions, and the ongoing rate easing by the Fed, along with a weakening dollar, has acted as a trigger for uptick in gold,” says Upasana Chachra, chief India economist at Morgan Stanley.
N.S. Ramaswamy, head of commodities at Ventura Securities, says “every pullback is being met with aggressive buying”. In fact, domestic gold has even been trading at a sustained premium to international prices, says Kavita Chacko, research head, India, at the World Gold Council.
The frenzy has spilled beyond jewellery counters into the investment market. Gold exchange-traded funds (ETFs) in India saw Rs8,363 crore inflows in September, nearly four times August’s figure. Between January and September 2025, total inflows touched Rs19,830 crore, a 169 per cent jump year-on-year. The AUM of gold ETFs rose to Rs90,136 crore, more than double the previous year’s figure. This Diwali, jewellers also reported a sharp rise in purchases of gold bars and coins, as consumers bet on further price increases.
“Gold and silver coins continue to see exceptional demand, often exceeding supply in some locations,” said Ramesh Kalyanaraman, executive director of Kalyan Jewellers. Demand was so strong that Kalyan Jewellers made gold and silver coins available on online marketplaces and quick commerce platforms to make them accessible.
“Gold is not only a hedge against inflation and currency depreciation but also aids in portfolio diversification,” says Chachra.
It’s not just investors who are hoarding gold. Central banks worldwide have been steadily increasing their holdings as part of a broader move to diversify away from the US dollar. In August 2025, they added 19 tonnes to reserves, up from 11 tonnes in July.
Gold serves as a hedge against currency devaluation and geopolitical shocks. “Perhaps gold prices now are showing the kind of movement that oil once did—a barometer of global uncertainty,” said RBI Governor Sanjay Malhotra at a recent conclave.
The RBI added 0.2 tonnes in September, taking its total reserves to 880.2 tonnes. Though its 2025 purchases are modest, the share of gold in India’s foreign exchange reserves has risen from 9 per cent to 14 per cent, mainly due to valuation gains.
Globally, the US remains the largest holder with 8,133 tonnes, followed by Germany, Italy, France and China. According to Goldman Sachs, central banks—especially in emerging markets—have increased their gold purchases fivefold since 2022, when Russia’s foreign reserves were frozen. “We view this as a structural shift in reserve management, likely to continue for at least three more years,” says Lina Thomas, research analyst at Goldman Sachs.
India’s love affair with gold runs deep, and it has been rewarding. According to Morgan Stanley, Indian households now hold $3.8 trillion worth of gold, amounting to roughly 34,600 tonnes.
“Gold provides a buffer in the household balance sheet,” says Chachra. With inflation easing and the RBI cutting rates by 100 basis points this year, disposable incomes have risen. “The stock of gold holdings provides a positive wealth effect,” she says.
After three years of double-digit returns, analysts still see room for upside. Goldman Sachs predicts $4,900 an ounce by December 2026; HSBC expects $5,000.
“Gold’s stellar rally reflects a confluence of macro shifts—fiscal uncertainty, a softer dollar and strategic diversification by central banks. Asia is emerging as the epicentre of this new monetary alignment,” says Manav Modi, commodities analyst at Motilal Oswal Financial Services.
Modi expects domestic prices to range between Rs1,28,500 and Rs1,35,000 for 10 grams, assuming the rupee stays near 89 against the dollar, while Axis Direct analysts forecast a potential climb to Rs1,50,000 by next Diwali. They believe the de-dollarisation trend and any fresh money printing in the US could push gold even higher.
But not everyone is euphoric. John Higgins, chief markets economist at Capital Economics, wrote that price of gold had “arguably risen far above fair value.”
As such historical data shows that gold bull phases are often followed by long flat or even negative periods. For instance, gold prices stagnated for years after 2013.
Inderbir Singh Jolly, CEO of PL Wealth Management, also cautions: “Investors should buy thoughtfully, balance ritual with risk,” and focus on liquidity and asset allocation, not emotional impulse.
At the retail level, consumers are adapting. Jewellers report a clear shift towards lightweight and lower-carat jewellery, balancing sentiment with affordability. “We are seeing customers move to 18-carat, 14-carat and even 9-carat options to keep the joy of gifting alive without stretching household budgets,” says Sen of Senco Gold.
Eshwar Surana, managing director of Raj Diamonds, says there is a rising demand for diamond-studded jewellery with minimal gold content. “This festive season has been exceptionally strong, with around 20 per cent higher demand than last year,” he says.
The trend has boosted jewellers’ balance sheets. Titan reported 19 per cent year-on-year jewellery growth in the July–September quarter, while Kalyan Jewellers posted a 31 per cent revenue rise, fuelled by weddings and festive sales.
“Despite record prices, consumers view volatility as an opportunity to reinvest—whether through gold coins or by upgrading jewellery,” says Ajoy Chawla, CEO of Titan’s jewellery division.
India’s appetite for gold is enormous, but it still imports nearly all of it. Imports in 2024 totalled 724 tonnes, worth $52 billion—up 21 per cent in value despite lower volumes. To ease dependence, jewellers are encouraging gold recycling and exchange schemes.
The World Gold Council estimates recycling has climbed from 30–35 per cent to about 50 per cent in recent months.
Muthoot Exim, part of the Muthoot Pappachan Group, has been a pioneer. “Around 30,000 tonnes of gold lie idle in households. If even a fraction is recycled, it can cut imports and support the economy,” says CEO Keyur Shah.
The gold loan business is another big winner. With prices soaring, the same amount of gold fetches more credit. “If someone wanted Rs2 lakh earlier, he needed two chains. Now, one is enough,” explains George Alexander Muthoot, managing director of Muthoot Finance, India’s largest gold loan company.
Once seen as a last resort, gold loans are now used by farmers and small businesses for working capital. “Gold loans are helping drive economic growth,” says Muthoot.
According to credit ratings firm ICRA, gold loans grew at 26 per cent CAGR over financial years 2024 and 2025, reaching Rs11.8 lakh crore in March 2025. The market is expected to touch Rs15 lakh crore by March 2026, and Rs18 lakh crore the following year.
While the tonnage of gold pledged grew modestly, rising prices have turbocharged asset values. “We foresee NBFC gold loan assets under management expanding 30–35 per cent this financial year, given elevated gold prices and slower growth in unsecured lending,” says A.M. Karthik, senior vice-president at ICRA.
As Jolly of PL Wealth Management sums up: “Gold is no longer just an auspicious adornment—it’s a core strategic asset.” But the wise investor, experts add, will balance devotion with diversification.
Golden ‘opportunity’
IN JULY 2024, the government slashed import duty on gold to 6 per cent from 15 per cent—a 60 per cent decrease. It was hailed as a masterstroke—making legal imports more affordable would remove the need for smuggling. The plan was working, with the Central Board of Indirect Taxes and Customs chairman confirming in February that there was a significant reduction in gold smuggling.
However, the price last year (end of July) was Rs69,820 per 10g of 24 carat gold; this year, on October 21, it hit Rs1,30,580—an 87.1 per cent increase. The price in Dubai on the same day was around Rs1,24,700. The price difference is close to Rs6 lakh per kg and tax evasion (6 per cent duty plus 3 per cent local tax) can yield at least an additional Rs11 lakh per kg. If 50 per cent of this is directed towards operational costs, smugglers can still make a profit of more than Rs11.5 lakh per kg. No wonder then that there has been a rise in smuggling cases recently.
But, smuggling is not the only issue related to surging gold prices. According to an analysis by News9Live, there is a strong correlation (0.84) between gold price and linked crime. The analysis also said chain snatchings were up 75 per cent and gold-targeted bank heists up 500 per cent since 2020, as gold price increased 155.54 per cent (October 21, 2020-October 21, 2025). In 2024, Bengaluru saw a 20 per cent rise in domestic-help theft cases, involving a number of large hauls worth crores.