A report released by the World Gold Council (WGC) said that the feedback from physical market participants suggests that consumer demand has remained resilient following the inauspicious period (mid-December to mid- January), despite record-high gold prices and elevated volatility, with buying skewed towards investment products. Sharp price gains have reinforced bullish sentiment towards gold, with limited expectations of a meaningful correction. The rally has also attracted new buyers across age groups, and price dips have triggered purchases.
Jewellery buying has reportedly become measured, with consumers preferring staggered accumulation over lump-sum purchases, even for weddings. While jewellery demand volumes are estimated to be lower by ~20% year-on-year, in value terms sales growth has been up by 25–30%, supported by elevated prices. Purchases through exchange of old gold remain high, accounting for 40–70% of transactions in some markets. Investment demand for bars and coins continues to hold firm, with some participants indicating a potential shift in allocation from capital markets to gold. Meanwhile, liquidation activity remains limited, reflecting confidence among holders that prices are unlikely to see a sharp correction.
January marked a historic month for Indian gold ETFs, with record-breaking inflows, holdings, assets under management (AUM), and investor participation. Indian gold ETFs recorded their ninth consecutive month of net inflows, reaching a record INR 240 bn (US$2.5bn), the report said. This was the third highest globally, after the US and China. Notably, inflows into gold ETFs surpassed those into equity funds7 for the first time, which could be indicative of evolving preference in investor asset allocation. The strong demand was underpinned by sustained momentum in the gold price and a likely shift towards diversification amid subdued performance in domestic equity markets.The surge in inflows, along with elevated gold prices, led to a sharp increase in AUM, which climbed to Rs 1,842bn (US$20bn) by end January, a more than a threefold increase on a y/y basis. Furthermore, cumulative holdings across the 25 gold ETFs crossed the 100t milestone for the first time, with a record monthly addition of 15.5t taking total holdings to 110 tonne The momentum extended into February, with net inflows between 1 and 12 February estimated at Rs 46bn (US$501mn), translating into an additional 3 tonne to cumulative holdings. This sustained trend highlights the resilience of investor interest in the asset class. Gold ETFs now account for 2.3% of the total mutual fund industry AUM, the highest share on record and a notable increase from 0.8% a year agoInvestor participation also increased markedly during the month, with 1.2 million new accounts (folios) added, bringing the total number of gold ETF accounts to 11.44mn. The persistence of inflows coupled with rising investor participation underscores the growing prominence of gold ETFs within investor portfolios.
Buying interest in digital gold strengthened further in January, the WGC report said. Purchases via the Unified Payments Interface (UPI) totalled IRs 39bn (US$432mn), representing a nearly 90% month-on-month increase and more than a fourfold year-on-year rise. In volume terms, an estimated 2.6 tonne was purchased through this channel, marking a 70% month-on-month increase. The surge in buying activity appears to reflect momentum-driven demand, as both domestic and international gold prices breached multiple all-time highs during the month.
WGC added that in addition, the ease of transaction and low minimum investment requirement have continued to attract retail participation. Although digital gold products remain unregulated, they are increasingly gaining consumer attention, underscoring a growing need for comprehensive regulatory oversight.
