According to US investment bank Morgan Stanley, Indian households now hold a staggering $3.8 trillion worth of gold — equivalent to 88.8% of the country’s GDP.
“This implies a positive wealth effect on the household balance sheet, given the uptrend in gold prices,” economists Upasana Chachra and Bani Gambhir wrote in a recent note. They added that families are also benefiting from “lower interest payments amid monetary policy easing and increased disposable income due to tax cuts.”
That’s quite the golden start to India’s festive season — even as record prices have taken some sheen off the precious metal.
Gold Rush in Festive Time
In Delhi’s bustling Lajpat Nagar, jewellery markets are overflowing with shoppers ahead of Diwali. Shops have stayed open late into the night, with flower-adorned entrances and glowing signboards luring customers in.
Gold prices — now above $1,440 (₹1.32 lakh) per 10g — have surged nearly 60% this year, while silver has climbed 70%. Yet, Indians are still crowding jewellery stores, especially for Dhanteras and Diwali, considered highly auspicious for buying gold and silver.
“People fear missing out — prices could rise even further,” said jewellers “As a result, I have more customers this year.”
Still, with budgets under strain, jewellers are adapting. “People aren’t saying they won’t buy — just that they’ll buy less,” they say. To keep sales alive, many are offering lightweight jewellery and micro gold coins as small as 25mg, selling for about $35 (₹3,000).
Investment Over Ornamentation
A clear trend has emerged — buyers are increasingly viewing gold as an investment rather than adornment.
According to the World Gold Council (WGC), jewellery’s share of total gold demand in India dropped from 80% in 2023 to 64% in Q2 2025, while investment demand — mostly in bars, coins, and ETFs — jumped from 19% to 35%.
“ETF assets under management have risen over 70% this year,” said Kavita Chacko, head of research at WGC, noting that digital gold and bullion investments are surging too.
RBI’s Golden Strategy
It’s not just retail investors driving demand. The Reserve Bank of India (RBI) has been a key player, raising gold’s share in its foreign exchange reserves from 9% to 14% in 2025.
“The RBI has been a major pillar of global gold demand over the past three years,” said bankers explaining that the central bank is diversifying its reserves to reduce dependence on the dollar and hedge against geopolitical uncertainty.
Outlook: Demand Shines Through
Despite record prices, analysts expect gold demand to stay resilient through the festive and wedding season.
“The affluent classes will continue to buy, though it’s a setback for lower-income families,” said economists. “Demand will hold up in value terms, even though volumes may fall.”
Still, for many, the soaring prices are a deterrent. Lovelina, a bride-to-be shopping in Lajpat Nagar, said, “I’m having to think twice before buying. I might wait for prices to dip before completing my wedding purchases.”
For now, India’s love affair with gold remains unbroken — even if the shine comes at a higher price this Diwali.
