 "Sachin Jain, Regional chief executive office, India, World Gold Council (WGC)")
A sharp rally in gold prices in the last 18 months has raised several issues. However, a long-term gold policy with several milestones is being drafted. In a virtual interview, Sachin Jain, regional chief executive office (CEO), India, World Gold Council (WGC), tells Rajesh Bhayani that fundamentals continue to support the gold rally in 2026, adding that despite the high price, consumers have increased their budget for jewellery-buying as a percentage of marriage expenses. Edited excerpts:
Gold price has seen a sharp rally over the last two years. Will it fizzle out in 2026?
The rally seen in the last 18 months was purely driven by fundamentals. It started with the geopolitical crisis and global central banks buying gold to add to their reserves. De-dollarisation is another reason. The share of US dollars in global forex reserves, which was 74.5 per cent 18 months ago, has now fallen to 56 per cent, and a good part of it has been invested in gold. Rising US and global debt levels are another reason. US debt is $37 trillion. Even if all goes as planned by the US administration, it may fall to $33 trillion, but that will be in the medium to long term. Hence, in 2026 and in the medium term, reasons supporting the rally in the gold price remain in place.
Going forward, we have projected three scenarios. One, everything goes right and growth returns, debt reduces, and recession reverses, in which case gold price could fall 20 per cent. However, this is unlikely. Second, everything goes worse. The world experiences situations like a world war. In such a case, gold may rise 25-30 per cent. This is also unlikely. Finally, we learn to live with trade complications and high global debt. This is possible, and this means pillars of rally in gold price are also in place. Levels have to be seen. One has to keep in mind that the rally is not speculative but based on fundamentals.
With prices only rising, how will demand be impacted in India?
WGC’s September quarter report had estimated gold demand for 2025 between 600 tonnes and 700 tonnes. It was around 800 tonnes in 2024. Despite prices rising, based on the last couple of months' trends in demand, I feel we will end the year with demand on the higher end of the range projected earlier. The fact is that even 700 tonnes, with prices significantly higher, is a good number.
Because of rising prices, the budget for jewellery in wedding expenses has increased from 30 per cent earlier to 40 per cent now. Investment demand, in fact, is rising in volume terms. For example, India’s gold ETF (exchange traded funds) outstanding was 56 tonnes in the beginning of the year. By now it is in the nineties. The number of portfolios in ETFs is also growing. The year 2026 may see a multitudinous growth in ETFs.
Charges for jewellery-making are defined as a percentage of gold price. Manufacturing costs have not increased so much, but consumers are paying a much higher price. How do you respond?
WGC can’t play a role in how the retailers do their business or price their products. What we can say is that there has to be transparency, and consumers should have a choice. We have just started a self-regulatory organisation for the gold industry. They can set standards for jewellers on how they operate, treat their customers, and bring transparency. It is not fair to say that everybody's charges are very high. There is a cutthroat competition. Jewellers also do undercutting to retain customers.
There are no updated estimates on the total gold held by Indian households. This is important as the price of the yellow metal has skyrocketed. Your comments.
WGC’s last estimate on gold held by Indian households was 25,000 tonnes a decade ago. Even that was not scientific. We will launch a new study in the next quarter to review and come up with revised estimates.
The government has discontinued sovereign gold bonds (SGBs), and the gold monetisation scheme (GMS) failed to take off. These were designed to reduce gold imports. With rising gold import bills, what else can be done?
The WGC is giving final touches to a report on the government’s gold policy 2047, the centenary year of Independence. Next quarter, we will be submitting a document on this to the government, titled “Svarneem Udaan 2047” (Gold Policy 2047). There will be recommendations on what role the gold industry will be playing by 2047. It will include targets to be achieved by 2030, 2035 and 2040, and what should be done in the first phase.
One of the most important recommendations would be to privatise GMS. The existing GMS run by the government has not taken off. Our view is that the government should exit the operations of GMS and allow private bodies to operate the scheme. Jewellers should be allowed to mobilise gold from households and pay interest. Gold thus collected can be used for making jewellery to reduce dependence on imports. This should be under the regulations.
We estimate that 30 per cent of the gold held by Indian households is in the form of coins and bars. Jewellery has an emotional value, but coins and bars are a financial investment, and that can be monetised.
There should be a use of better technology to improve GMS. Currently, there is a big time gap of two-three weeks from the first deposit of the gold to the bank. Technology can reduce this significantly.
A sharp rise in gold price has changed the equation for loan against gold by consumers and gold metal loans taken by jewellers. Jewellers have to arrange for higher margin money with rising prices. How do you see this issue taking shape going ahead?
So far as consumer loan against gold is concerned, the situation is better because all loans are collateralised and there is at least a 20 per cent margin. With rising prices, this scene has only improved for lenders as well as consumers. I would have been worried had the gold price fallen. However, business loans in the form of gold metal taken by jewellers are painful for them. With rising prices, they have to arrange for higher margin money to be paid to lenders. On the other hand, the value of their assets (stock held by them) has increased significantly, and their balance sheet looks fine. There is no hue and cry about this issue.
How do you see the 9-carat jewellery demand in view of very high gold prices?
Consumers are buying gold for its value and purity. Twenty manufacturers had introduced 24-carat gold jewellery in the recent India International Jewellery Show (IIJS). This jewellery was made available to over 400 stores in the country, and it met with a very good response. The next pillar of gold jewellery demand may be higher carat and not lower carat. Even technology has made it possible today to produce hard metal high-carat jewellery. Pickup in 9-carat and 14-carat jewellery may take 15-20 years.
Is the high price leading to consumers encashing old gold?
Data and trends suggest that sales of gold for cash are not rising, but may have reduced. This is a very good sign because it shows consumers holding it, showing their confidence in the metal. The change has been observed in exchanging old gold for buying new jewellery. The proportion of offering old jewellery for buying new was 25-30 per cent earlier and has now increased in recent months to 45-50 per cent.
