Gold prices in the country hit an all-time high of Rs.109,840 per 10 grams last week, marking a 42% surge in 2025 after a 21% rise in 2024. While investment demand has inched up, jewellers expect consumer spending on ornaments to be constrained.

The upcoming Dussehra and Diwali season, along with the winter wedding months, typically drives nearly one-third of India’s annual gold sales. Last year, festive demand reached 265.8 metric tons, boosted by a price correction and a reduction in import duty from 15% to 6%.

Despite the surge in prices, industry leaders remain cautiously optimistic. According to the World Gold Council India, consumer sentiment has shown signs of improvement in recent weeks, suggesting that while purchase volumes may decline, the overall value of demand is set to rise. Gold’s strong performance compared to other asset classes is also driving higher interest in exchange-traded funds (ETFs).

Wholesalers, meanwhile, believe that the government’s recent GST cuts on a range of consumer goods will leave households with more disposable income, which could provide some support to retail gold buying during the festive season.

While subdued jewellery buying may weigh on global bullion momentum, analysts say India’s reduced imports could ease pressure on its trade deficit and provide support to the rupee.