&w=3840&q=100)
170% surge in demand: Indians are ditching jewellery for gold ETFs in 2025
Gold may still shine, but in 2025, it's no longer just for the wedding box. As prices surged to a record Rs 93,217 per 10 grams, Indian investors made a decisive shift—pulling back from heavy jewellery buys and pouring money into gold ETFs. According to Motilal Oswal Private Wealth, investment demand soared 170% year-on-year, driven by market volatility, geopolitical tensions, and the search for safer, smarter assets.
Jewelry demand slumped 25% in volume, but ETFs took center stage.
But behind this shiny spike was a quiet shift in how Indians viewed the yellow metal—not just as jewelry, but as an investment powerhouse.
While traditional jewelry buying dipped by 25% in volume, Indian investors were pouring their money into gold ETFs and digital gold products. Investment demand soared 170% year-on-year, largely thanks to robust gold-backed ETF inflows, especially in Europe, Asia, and India.
In fact, Indian ETF holdings grew by 11%, signaling a clear pivot toward paper gold, where convenience, liquidity, and compounding returns outweigh the emotional pull of ornaments.
"Investment in gold ETFs lead to a significant jump gold investment demand in Q1 2025, reaching 552t, marking a 170% y/y increase. This level almost matched that seen in Q1 2022 following the outbreak of the Russia-Ukraine war. The surge was primarily driven by a sharp revival in gold ETF inflows, which recorded their strongest quarterly demand for three years. Global gold-backed ETFs saw holdings increase by 226 tonnes during the quarter, bringing collective holdings to 3,445 tonnes. This was boosted by trade tensions and gold price momentum, with investors rushing for the safety of gold," said the report.
India also showed strong growth in ETF holdings, increasing by 11% over the period.
Why now?
Protection from volatility: With markets on edge, gold proved its mettle once again as a safe-haven asset.
Diversification: Central banks (including RBI) continued to stockpile gold, reinforcing trust in its long-term value.
Tax-efficient growth: ETFs offered better post-tax returns than physical gold, with no making charges or storage hassles.
Consumers responded to record prices by trading in old jewelry, purchasing lighter pieces, or opting for gold loans rather than new buys. Nearly 45% of gold purchases in Q1 involved some form of exchange.
What about jewelry?
Jewelry demand took a hit, no doubt. But even with a 25% drop in volume, value-based demand was up 3%, proving gold's undying allure—even in lean times. Need-based purchases like wedding jewelry still held ground, while discretionary buying paused.
Jewellery Demand Contracts on High Prices
"India experienced a 25% y/y fall to 71t, the lowest quarterly volume since Q3 2020, as the record price impacted affordability. Despite the volume drop, the value of demand in India was 3% higher y/y.
Consumers adapted to high prices by buying smaller or more lightweight pieces, holding back purchases, or opting to trade in old jewelry for new. In India, around 40-45% of purchases reportedly involved some form of exchange by the end of the quarter. The trend of gold loans, where jewelry is pledged as collateral, also continued to grow in India. While need based purchases like those for weddings held up relatively well, they were not enough to offset the drop in discretionary buying," noted the report.
Global gold demand hit a Q1 record in 2025, driven by strong ETF inflows and continued central bank buying despite a slowdown from last year, while jewelry demand fell sharply due to high prices. India, gold jewelry consumption dropped in volume but remained resilient in value terms, with the Reserve Bank of India modestly increasing its reserves, reflecting ongoing price sensitivity and gold's continued strategic portfolio importance.
RBI plays it cool
The Reserve Bank of India also adjusted its strategy, moderating gold purchases to just 0.6 tonnes in March. But even with slower buying, RBI's total holdings reached a record 879.6 tonnes, comprising nearly 11.7% of India's forex reserves. Gold's role in India's economic armor remains solid.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Standard
12 minutes ago
- Business Standard
DhanSafal Finserve Limited Reports Strong Retail MSME Lending Growth, achieves 339 percent AUM Growth and Expands Geographical Footprint
NewsVoir Mumbai (Maharashtra) [India], May 31: DhanSafal Finserve Limited, formerly known as Luharuka Media & Infra Limited ("DhanSafal"/ "the Company") today announced its financial and operational results for the financial year ended March 31, 2025, showcasing a strong performance across key growth parameters. The company reported a remarkable 339% year-on-year growth in Assets Under Management (AUM), reaching Rs. 43.43 crore (as on 31.03.2025) from Rs. 9.9 crore (as on 31.03.2024), fueled primarily by robust demand for secured MSME loans. Fresh Loan disbursements totalled Rs. 38.07crore during the year, reinforcing DhanSafal's position as a reliable credit partner for small businesses and emerging entrepreneurs. Retail operations have gained significant traction, leading to the opening of new locations. DhanSafal currently operates from 5 locations across Maharashtra, Madhya Pradesh, and Rajasthan. Strategic investments in infrastructure, digital systems, and skilled personnel have enhanced operational efficiency and customer experience, enabling the company to effectively meet the rising demand for retail and MSME lending. Serving over 300 customers predominantly from the retail MSME segment including small traders, micro-industrialists, service providers, and rural entrepreneurs - DhanSafal is expanding financial inclusion by providing formal credit access to many borrowers. Interest income has more than doubled, supported by a strengthened net worth through capital infusion and retained earnings. The company remains committed to deepening its footprint in semi-urban and rural markets by offering practical loan structures that promote grassroots economic activity and support livelihoods. Looking ahead, DhanSafal aims to disburse Rs. 200 crore in loans and target an AUM exceeding Rs. 250 crore by the end of FY 25-26. "FY2024-25 marked significant progress for DhanSafal, reinforcing our role as a trusted credit partner. We are committed to scaling our impact through disciplined growth, innovation, and unwavering customer focus," said Bobby Singh Chandel, CEO, DhanSafal Finserve Limited. DhanSafal Finserve Limited is a digitally driven, well-diversified financial services company focused on simplifying credit access across India. With a strong presence in the retail loan sector, we offer flexible and competitive lending solutions stailored to individual needs from personal and business loans to income-generating credit. Our mission is to bridge the gap between traditional banking and underserved communities through ethical practices, innovative digital platforms, and a relentless customer-first approach. At DhanSafal, we believe that financial empowerment should be accessible to all because with the right support, success is possible for everyone.
Scroll.in
18 minutes ago
- Scroll.in
Turkiye's support for Pakistan signals a bigger neighbourhood problem for India
In the recent India-Pakistan military conflict, Turkiye stood steadfast in offering unambiguous support to Pakistan before and after the conflict. Sources close to the Turkish government claimed that Turkish cargo planes carried military supplies to Pakistan, although this was denied by Turkish officials. This is one of the loudest statements Turkiye has made in a long time, marking a clear departure from its previously stated Asia Anew Initiative, as Turkiye reprioritises security over trade in its South Asia policy. Turkish President Recep Tayyip Erdogan has spoken several times since then, reiterating his country's support for Pakistan. Turkiye has clearly made up its mind on how it looks at South Asia and who it sees fit to support in the region. This has not happened overnight. Nor is it temporary. Turkiye is operating within its conception of a 'securitised South Asia,' where its national security is linked to the region. Nearly all statements coming from Turkiye after the Indian military action have condemned the 'provocative steps' and claimed that strikes inside Pakistan raised 'the risk of an all-out war'. No other Muslim or Arab nation, except Azerbaijan, issued a direct condemnation of the Indian operation. Turkiye and Pakistan share predicament There is general agreement that in the post-Cold War era, both Turkiye and Pakistan have lost their relevance to the Western security architecture. Both have been searching for ways to stay relevant in the changing security landscape. Turkiye's NATO allies have been harsh in their criticism of its growing ties with Russia, particularly after it purchased the S-400 missile defence system. Its allies have denied Turkiye crucial defence technologies and supplies to the extent that in today's Middle East, non-NATO members Israel and the UAE have received the best of NATO defence technology, which Turkiye has been denied, including the F-35. Pakistan, too, is vulnerably dependent on the Chinese defence industry – its only option after the West abandoned it. Turkiye's Pakistan policy may not be India-centric, but they need each other because they have few allies. The bigger question, however, is whether Turkiye can or should have a Pakistan policy at the expense of its relations with India. Choosing Pakistan over India There is an unspoken consensus in Ankara and Riyadh that Pakistan is far too important to be written off. Islamabad has already become Turkiye's most important defence ally outside NATO. However, this has come at a heavy cost: an antagonised India. Almost every Muslim nation, not just Turkiye, faces the same dilemma. Saudi Arabia and the UAE have, however, successfully de-hypenated their relations with India and Pakistan. Turkiye tried to maintain a degree of ambiguity about its relations with Pakistan for a long time and sought close and confident ties with India. Turkiye's offer to India was equally important, as it involved strategic relations with New Delhi in exchange for the normalisation of ties with Pakistan, including a peaceful resolution of their disputes over Jammu and Kashmir. For that, the Turkish president used all possible tactics to bring New Delhi on board, which mostly resulted in public and diplomatic backlash. The period 2019-2022 could be counted as the lowest point in Turkiye-India relations when the two countries waged a massive media campaign against each other. This was in the wake of the revocation of the special status accorded to Jammu and Kashmir within the Indian federal structure. Since 2022, there have been signs of withdrawals on the Turkish side as India gave Turkiye a clear message that Turkiye's special ties with Pakistan and supporting its Kashmir politics are the biggest obstacles in India-Turkiye relations. In 2022, Turkiye and Pakistan supported Azerbaijan in the Nagorno-Karabakh war. Armenia, defeated and isolated, rushed to India for crucial defence supplies, including India's indigenous air defence system, Akash. Not just Armenia, India quickly reached out to Turkiye's regional rivals and detractors, Iran, Greece, Cyprus, UAE and Israel, seeking close defence and strategic relations. Many in Delhi explained this as a reaction to Turkiye's defence relations with Pakistan, Bangladesh, and the Maldives. Turkiye's rising influence in its immediate neighbourhood may challenge India's interests. By aggressively marketing its defence sector in Asia, Turkiye has attracted new clients and potential allies whose perspectives on regional security may differ from those of Delhi. India's foreign policy has gradually shifted. India has started reimagining itself as a resurgent power, taking pride in self-reliance (Atmanirbhar Bharat). 'India First' becomes India alone In the ruling party's ideological discourse, India First has always been echoed as a slogan, which means India's interests are the supreme objectives of its new foreign policy. Realist pundits in New Delhi have often defined, even exaggerated, 'India First' as 'India Alone'. This contradicts a previously practised the ' Gujral Doctrine ' that offered support to the neighbouring countries without expectation of reciprocity. India's geopolitical imagination of itself is even more complex. It goes well beyond the boundaries of its existing nation-state. Today, India sees itself as a reduced geographical version of a larger civilisational India. These two imaginations of India – 'India First' and India as the magnanimous neigbour seeking no reciprocity – demand distinct and occasionally contradictory foreign policies. 'India First' represents that realism that originates from the perceived trauma of the dismemberment or shrinking of a civilisational India. On the other hand, Turkiye and China are aggressively advancing transnational foreign policies by instrumentalising their Turkic and Ottoman pasts and the Belt and Road Initiative, respectively. Under Narendra Modi, India has successfully built bilateral partnerships worldwide, leaving regional cooperation forums, including the South Asian Association forRegional Cooperation (SAARC), mostly unattended or underrepresented. India's growing disinterest in regional cooperation forums has allowed India's neighbours to look beyond India. This has provided an opportunity for China, Turkiye, and the United States to ignore India's regional leadership in South Asia. India must be worried that the securitisation of South Asia has helped China, Turkiye, and other powers find new defence partnerships in its neighbourhood. The change was coming gradually and silently, away from the glare of diplomatic crises. The end of ambiguity in Turkiye's South Asia policy and the burgeoning Turkiye-Pakistan defence relations is a new reality that India must deal with. What is apparent, however, is that India does not have a Turkiye policy beyond transactional interests and temporary anger, which is insufficient to counter a rising power like Turkiye. It might need its allies within the Arab and Islamic world, particularly Iran, Saudi Arabia, and Indonesia to discourage Turkiye from its South Asian ambitions. Yildirim Beyazit University. He is also the Director of Research at the International Dialogue and Diplomacy Foundation in New Delhi.
United News of India
19 minutes ago
- United News of India
Proposed 50 pc hike in US steel, aluminum import tariffs to be significant bearing on India's steel exports: FIEO Prez
Hyderabad, May 31 (UNI) Federation of Indian Export Organisations (FIEO) on Saturday expressed concern over the recent announcement by the US President to double import tariffs on steel and aluminium from 25 to 50 percent, citing potential disruption to India's steel and aluminium exports, particularly in value-added and finished steel products and auto components. While reacting over the development, FIEO President S C Ralhan stated in a statement that the proposed increase in US steel and aluminum import tariffs will have a significant bearing on India's steel exports, especially in semi-finished and finished categories like stainless steel pipes, structural steel components and automotive steel parts. These products are part of India's growing engineering exports, and higher duties could erode our price competitiveness in the American market. India exported around US 6.2 billion Dollar worth of steel and finished steel products to the US in FY2024-25 including a widerange of engineered and fabricated steel components and about USD 0.86 billion of aluminum and its products. The US is among the top destinations for Indian steel manufacturers, who have been gradually increasing marketshare through high-quality production and competitive pricing. The FIEO President said, "while we understand that the decision stems from domestic policy considerations in the US, such sharp increases in tariffs send discouraging signals to global trade and manufacturing supply chains. "We urge the government to take up the issue at the bilateral level to ensure that Indian exporters are not unfairly disadvantaged more so far the shipments, as 25 percent additional duty will be a huge burden, which is difficult to be absorbed by the exporter / importer," he said. The FIEO Chief also emphasized the need for Indian exporters to diversify their markets and invest in higher-grade value-added products to mitigate the impact of such protectionist measures. UNI KNR SS
