India's Gold Demand Surges, But Prices Impact Future Consumption
Gold Demand in India Reaches New Heights
New Delhi, Nov 5: In 2024, India's total consumer demand for gold rose to 802.8 tonnes, accounting for 26% of the global demand, placing India in second position after China, which had a demand of 815.4 tonnes, as reported by SBI Research on Wednesday.
Domestic gold supply remains minimal, with imports making up approximately 86% of the total supply in 2024, according to estimates from the World Gold Council. Gold imports saw a significant increase of about 31% in FY24 and 27% in FY25.
However, the rising prices have led to a decrease in gold demand in 2025. In the third quarter of 2025, consumer demand dropped by around 16% year-on-year, primarily due to a decline in jewellery purchases, as highlighted by Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor at SBI.
Additionally, the high prices have caused gold imports to fall by 9% to $26.5 billion during the April-September period of FY26, down from $29 billion in the same timeframe of FY25.
“An interesting trend is the increase in gold reserves held by central banks. The RBI's gold reserves climbed to 880 tonnes in 2025 as part of its strategic reserve management,” Dr. Ghosh noted.
Over a 5, 10, and 15-year period, gold returns have been comparable to those of the equity market (Sensex), but they significantly outperformed market returns over the 1-year and 3-year periods.
“Moreover, recent discoveries of new gold mines in various districts of Odisha, such as Deogarh, Keonjhar, and Mayurbhanj (with an estimated 1,685 kg of gold ore identified by the GSI), as well as in Jabalpur, Madhya Pradesh (potentially running into lakhs of tonnes), and Kurnool district in Andhra Pradesh (home to India’s first large private gold mine expected to yield 750 kg of gold annually), could alleviate import pressures and positively impact our current account balance,” the report stated.
The government initiated the issuance of Sovereign Gold Bonds (SGBs) in November 2015, continuing with 67 tranches, the latest of which was issued in February 2024.
As of October 23, the total outstanding SGBs amounted to 125.3 tonnes. Considering the redemption price of Rs 12,704 announced for the 2017-18 Series IV, the total cost to the Government is estimated at Rs 1.59 lakh crore.
“When factoring in the issuance of these units, it totals Rs 65,885 crore. Consequently, this results in a loss of Rs 93,284 crore to the Government due to the rise in gold prices,” the report concluded.