India's Diwali Gold Market: Embracing Investment Over Ornamentation

Mon Oct 20 2025 18:22:48 GMT+0300 (Eastern European Summer Time)

As India's Diwali approaches, a notable shift in the gold-buying landscape is evident, with consumers prioritizing investments over traditional decorative purchases.

This Diwali season, India's gold market sees a change where shoppers are focusing more on investment in gold and silver rather than on jewelry for personal adornment. High gold prices have pushed consumers to buy lighter jewelry or gold coins, reflecting a broader trend of investing in precious metals. Despite the price hikes, the demand remains strong, driven by cultural traditions and the allure of gold as a stable investment amid economic uncertainties.

Ahead of the Hindu festival of Diwali, the jewellery market in Indian capital Delhi's vibrant Lajpat Nagar neighbourhood is teeming with crowds.

Shops have stayed open even on holidays, and at dusk, dozens of cars line up the streets as a string of flashy signboards beckon shoppers into the flower-adorned stores.

Soaring gold prices - which have topped $1,440 (£1,081) for 10g - may have slightly dented demand for jewellery in the world's second largest market for the yellow metal this year, but Indians are not willing to entirely give up on their penchant for gold yet.

Diwali, along with Dhanteras - a smaller festival that falls on Saturday this year - are believed to be auspicious occasions to buy precious metal, with hundreds of thousands of Indians flocking the markets to buy gold and silver coins, bars and jewellery, which they believe bring wealth and luck.

Skyrocketing prices have created FOMO - or the fear of missing out - in the minds of buyers, who are worried prices might rise even further. As a result, I have more customers this year, said Prakash Pahlajani, who runs Kumar Jewels.

But with prices - gold is up 60% and silver 70% - shooting through the roof, jewellers are having to change tack to counter stagnant customer budgets. People are not saying 'I don't want to buy'. Instead, they are saying, 'I'll buy a little less, said Tanishq Gupta, another jeweller down the road.

He said he's had to be innovative and design pieces that look elaborate but have a reduced quantity of gold in them. A coin made of 250mg gold, which he sells for as low as $35, is now thinner but made to look as big as the heavier ones.

Several jewellers the BBC spoke to pointed to another clear trend - more customers were buying gold and silver for investment rather than jewellery this year, something that is also reflected in bullion market data.

While gold jewellery continues to account for the largest share of India's overall gold demand, the proportion driven by investment - primarily bars and coins - has been rising steadily.

A lot of that demand is also being fed by investment in exchange-traded funds (ETFs) or digital gold, where September marked record high inflows.

Moreover, gold prices are being significantly influenced by India's central bank, with the metal's share in its foreign exchange reserves rising from 9% to 14% in 2025.

Going forward, with the festive and the wedding season under way, retail demand for gold and silver is expected to continue to hold up despite record-high prices. The affluent classes will continue to buy, though it is a setback for lower income families, said Madan Sabnavis, the chief economist at the state-run Bank of Baroda.

Despite the high prices taking some sparkle off gold, experts believe that the cultural affinity for gold in India ensures the appetite for the precious metal remains strong for the long term.