India's gold investment demand hits decade high in 2025, ETF inflows surpass 10-yr tally: CareEdge

Gold investment demand in India surged to nearly 40 per cent of total consumption in CY2025, the highest in recent memory, with ETF inflows alone adding 37.5 tonnes -- more than the combined investment of the previous 10 years -- as geopolitical uncertainty and record prices accelerated a structural shift away from jewellery, CareEdge Ratings said on Monday. The ratings agency projected investment demand to remain elevated at 35-40 per cent of overall gold consumption in FY27, supported by continued portfolio diversification, central bank buying and sustained macro uncertainty. Gold prices are expected to stay in a higher range through 2026, though with intermittent volatility. ''Geopolitical uncertainty, momentum in gold prices and portfolio diversification preferences are expected to continue fuelling investment demand for gold,'' CareEdge Ratings Director Akhil Goyal said. The shift is reshaping India's gold consumption mix. Jewellery, which historically accounted for 70 per cent of total gold purchases, has fallen below 60 per cent in CY2025. While jewellery demand rose 10 per cent year-on-year in value terms to Rs 4.8 lakh crore, volumes declined 15 per cent as high prices pushed consumers toward lighter, lower-carat pieces. On the retail side, large listed jewellers are expected to post revenue growth of around 35 per cent year-on-year in FY26, driven by store additions and market share gains from formalisation, moderating to 20–25 per cent in FY27. ''Domestic organised jewellery retailers are expected to report revenue growth of over 35 per cent year-on-year in FY26, driven by steady consumer appetite for jewellery despite rising gold prices, market-share gains from accelerated sector formalisation and planned store additions,'' said Raunak Modi, Assistant Director, CareEdge Ratings. Gross margins are projected to expand 170-200 basis points in FY26 on inventory gains from unhedged gold, before normalising to 14-14.5 per cent in FY27. EBITDA margins are seen at 6.5-7 per cent in FY27, pressured by front-loaded costs from new store openings. The six large listed jewellers tracked by CareEdge added an estimated 310 stores in FY26 -- the second straight year of 300-plus additions -- though the pace of expansion as a share of existing stores halved to 11 per cent, pointing to cautious optimism. Franchisee stores are estimated to account for 62 per cent of total retail presence in FY26, up from under 60 per cent in FY23. Silver is gaining visibility among younger buyers and select organised retailers, but is not replacing gold in the near term. India continues to import most of its gold, meaning elevated demand in value terms will sustain import requirements even as volumes soften.

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