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.

 

As prices continue to fluctuate, consider this: the gold rush may no longer be about what glitters on your wrist—but what quietly compounds in your portfolio.