Gold soared to a record high closer to $4000 an Ounce as the US government shutdown and the political crisis in the France fuelled more uncertainty into financial markets. Gold has once again captured the spotlight, hitting new record highs in 2025 and reigniting memories of its past glory amid global crisis. From the 2008 financial meltdown to the 2020 pandemic, gold has historically surged when uncertainty looms. This time, too, a mix of geopolitical tensions, central bank buying, and monetary policy shifts are driving the rally. According to data from the World Gold Council, central banks worldwide have nearly doubled their gold holdings over the past decade, signalling confidence in the yellow metal as a global reserve asset. India, in particular, has steadily increased its reserves amid a volatile global backdrop. For Indian investors, this resurgence isn’t merely a fleeting phenomenon but reflects deeper, structural shifts both globally and domestically. Historically, gold has been more than just a precious metal in India, it is woven into the cultural, economic, and emotional fabric of the nation.
Traditionally favoured for jewellery, ceremonies, and sovereign reserves, gold’s role has evolved significantly, especially in recent years. The dramatic upswing of gold surging well beyond expectations underscores not only its timeless appeal as a safe haven but also its growing strategic role in India’s investment portfolios amidst heightened uncertainty. This year, gold prices have risen more than 60 percent, emerging as one of the best asset classes. As of October 10, 2025, 24-carat gold in India is priced at Rs 12,085 per gram, while 22-carat stands at Rs 11,795. The 20-carat rate is Rs 10,755, 18-carat at Rs 9,788, and 14-carat at Rs 7,795 per gram, according to the India Bullion and Jewellers Association (IBJA). These are base rates and exclude GST.
However, financial gold, in the form of ETFs (Exchange-Traded Funds) and SGBs (Sovereign Gold Bonds), is drawing in a new generation of investors seeking convenience, transparency, and returns. Yet, traditional gold, which is worn, gifted, and cherished, continues to anchor cultural and emotional value. This Diwali, India’s enduring love for gold isn’t evaporating. It’s simply taking a new form. Sky-high prices have encouraged many buyers to play smart and shift from heavy jewellery to smarter, paper-based options. Gold Exchange-Traded Funds (ETFs) are seeing record inflows, Sovereign Gold Bonds (SGBs) are trading at steep premiums due to limited supply, and digital gold is gaining popularity among investors due to numerous reasons like offering convenient, secure, real-time pricing and high liquidity, especially appealing to young investors. Investors who previously had little or no allocation to gold are now increasing their exposure, putting significant money into the metal and driving inflows into ETFs.
This shift indicates strong structural demand for gold backed instruments, even if the gold prices correct, investors are likely to see it as an opportunity to buy more and which could further boost inflows. India’s gold market is undergoing a quiet transformation where investment, innovation, and emotion now shine together. Net inflows into gold ETFs increased four times, coming in at `8,363 crore, while inflows into equity mutual funds dipped 9% to `30,421.7 crore in September 2025. In the previous month, this was `2,189.51 crore and `33,430 crore respectively. Gold and silver ETFs have gained traction in recent times among investors.
Indian capital market has yielded mediocre returns in the past year. Record exit of foreign institutional investors, continued tariff imposition by the United States, sticky earnings growth and rich valuations constantly keep the markets from moving upwards. Industry leaders also cite global macro factors underpin this trend behind the rush to precious metals like anticipated interest rate cuts, stubborn inflation, slowing global growth, and persistent geopolitical tensions are propelling investors towards safe-haven assets. Fresh investments by central banks in gold and silver, coupled with record flows in bullion ETFs reinforce this demand,” said Kartik Jain, MD & CEO, Shriram AMC. This rally reflects a new comfort with digital investment channels, ETFs are becoming a tactical tool for portfolio diversification, especially with rupee depreciation and volatile equities, even globally, Indian funds made a mark. Nippon India ETF Gold BeES topped all gold funds worldwide in September, with $279.7 million in inflows, surpassing US and European peers like iShares Gold Trust and Wisdom Tree Physical Gold. So, the ETFs represent India’s new-age gold buying, the SGB market evinces the show of scarcity and loyalty.
Since the RBI discontinued new issuances after 2024, demand has shifted to the secondary market, where existing bonds are commanding acute premiums. This discontinuation hasn’t dampened demand rather it has made existing SGBs a prized asset. Similarly, prices for various SGB tranches are commanding significant premiums on the National Stock Exchange (NSE). For instance, the SGB June 2030 series, issued at Rs 5,091 per bond, last traded around Rs 14,300 on October 9. SGB Feb 2032 series in early September traded around Rs 12,597, with a turnover of Rs 3.2 crore, but by early October, prices breached Rs 16,700 and turnover jumped to Rs 6.9 crore. The stream of festivity has added momentum to secondary market trading as volumes remain modest because most investors are reluctant to part with their holdings as they see it as long-term wealth creation, not a trading instrument.
Despite skyrocketing prices, India upholds the time-honoured legacy of jewellery which clearly signifies that jewellery tradition might bend but it doesn’t break in country like India as the festive jewellery buying remains resilient. However, the difference lies in what consumers are choosing. Jewellery stocks have shown mixed performance amid soaring gold prices. While revenue growth has been supported by higher realisations, volume growth remains subdued as consumers reduce purchase weights or delay big-ticket buys. People are spending, but selectively opting for lightweight, smaller pieces, or studded jewellery that blends aesthetics with value.
Titan Company’s domestic jewellery division grew 19 percent year-on-year, driven by Tanishq and CaratLane, both posting double-digit same-store growth. Studded collections across Tanishq, Mia, and Zoya saw mid-teen growth, while gold coin sales surged as investors sought bullion-backed value. Kalyan Jewellers, too, reported a 30 percent consolidated revenue growth in Q2FY26, supported by wedding and festive demand, with strong traction on its digital platform Candere. As the new gold equation is evolving in India, the festive gold story this year reveals an intriguing balance. Financial gold in the form of ETFs and SGBs is hooking in a new generation of investors seeking convenience, transparency, and steady returns. Yet, traditional gold like coins and the kind worn, gifted, and cherished continues to serve as a cornerstone of cultural significance and emotional resonance in a country like India.
Zubair Mushtaq, Research Scholar in Department of Commerce,
Kashmir University.
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