Jewellery’s dominance is gradually waning as financial gold gains traction among urban and younger investors. Today, 70% of India’s total gold demand comes from bars, coins and ETFs, reshaping the investment landscape.

Key Takeaways

  • Investment products now account for 70% of India’s total gold demand.
  • Jewellery demand fell 17%, while ETFs hit record inflows.
  • RBI’s increased gold purchases have helped stabilise the rupee.

According to World Gold Council (WGC) data, India bought 282 tonnes of gold in the first half of the year, driven largely by investment demand. ETFs alone attracted a net 20 tonnes, while jewellery demand slipped to 141.2 tonnes – the second‑lowest first‑quarter figure since 2000.

For centuries, gold has symbolised wealth and security in India. However, soaring prices, higher import duties and a maturing investor base have shifted preferences toward bars, coins and exchange‑traded funds, which are seen as lower‑cost, higher‑liquidity investment vehicles.

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Historical Background

India’s love affair with gold dates back to ancient times, where it was primarily a cultural and status symbol. The liberalisation of the 1990s sparked the first wave of financial gold adoption, and the 2015 Gold Monetisation Scheme attempted to bring idle household gold into formal banking channels, albeit with limited success due to tax and procedural hurdles.

Why This Matters

BozokMedia analysis shows that the shift toward financial gold strengthens India’s external balance, cushions rupee depreciation, and creates new avenues for portfolio diversification among millennials.

“Financial gold is emerging as a cornerstone of India’s capital structure, offering better risk‑adjusted returns than traditional jewellery.” – RBI Chief Economist
Did You Know?: Private households in India hold over 25,000 tonnes of gold, placing the nation among the top five holders worldwide.

Frequently Asked Questions

Question 1: Do gold ETFs provide better returns than traditional jewellery investments?

Answer: Generally, ETFs deliver higher returns due to lower fees and greater liquidity, though market volatility can affect performance.

Question 2: How will RBI’s gold‑buying policy impact domestic investors?

Answer: Large RBI purchases increase market supply, helping to stabilise prices and making entry easier for small investors.