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Investment demand is driving a structural shift in India's gold consumption, with its share rising sharply to 42 per cent in CY25 from 29 per cent in CY24, according to a report by CareEdge Ratings.
The report said the surge in investment demand was led by gold ETFs and bar-and-coin buying, supported by safe-haven demand, portfolio diversification and geopolitical uncertainty. It added that jewellery consumption has seen a relative decline, with its share falling below 60 per cent of total gold purchases in CY25 compared to a long-term average of around 70 per cent. According to CareEdge Ratings, global gold demand reached an all-time high of around 5,000 metric tonnes in CY25, up about 8 per cent year-on-year, driven primarily by strong investment demand despite high prices and macroeconomic headwinds. Global investment demand rose to 2,175 metric tonnes in CY25, surpassing the previous record of 1,805 metric tonnes in CY20, with ETF investments contributing over 800 metric tonnes, the report said. In India, ETF investments added 37.5 tonnes in CY25, exceeding the combined investment of the past 10 years, reflecting strong investor participation. The report noted that gold prices have entered a high-price regime supported by structural demand shifts, central bank buying and ongoing global uncertainties. Despite high prices, jewellery demand in India remained resilient in value terms, rising about 10 per cent year-on-year to Rs 4.8 lakh crore in CY25, although volumes declined by 15 per cent due to preference for lighter and lower-carat jewellery. CareEdge Ratings said organised jewellers are expected to benefit from the trend, with revenue growth projected at around 35 per cent year-on-year in FY26 and 20-25 per cent in FY27, supported by store expansion and market share gains from sector formalisation. The report added that margins are expected to expand in FY26 due to inventory gains, before normalising in FY27 amid range-bound gold prices and higher operating expenses from new store additions. (ANI)
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