Diwali 2025: Why is the gold demand high despite high prices?
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India's gold imports jumped to a 10-month high of US$9.16 billion in September. Photograph: (AFP file photo)
Gold prices in India: Donald Trump's tariff war and China's retaliation against the US have also pushed investors towards parking their money in gold.
The World Gold Council’s India Gold Market Update has said that the prices of gold hit their all-time high 48 times this year. The precious metal also crossed $4,000 per ounce mark globally.
Why is gold rallying?
Gold's domestic prices increased 66 per cent this year. The international gains were lower at 58 per cent. The prices saw an unprecedentedsurge because of geopolitical and global economic uncertaintiesthat boostedthe safe-haven demand.
Donald Trump's tariff war and China's retaliation against the US have also pushed investors towards parking their money in gold. Investors are also anticipating US Federal Rate revisions this year.
In India, the depreciation of the rupee against the US dollar led to more gains. The metal is trading above Rs 1,20,000 per 10 grams.
Despite the high prices of gold, Indians bought precious metal worth over Rs 85000 crore during Dhanteras.
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Investors have invested in gold ETFs. Assets under management (AUM) in gold ETFs have hit an all-time high of Rs 901 billion, reported Business Standard.
Supported by the festive demand, India's gold imports jumped to a 10-month high of US$9.16 billion in September. RBI also added 0.2 tonnes of gold to its reserves.
The World Gold Council said in its report: "The early onset of the festive season (September vs. October last year) and strong wedding demand helped to partially offset the impact of last year’s high base. Targeted marketing campaigns, promotional initiatives, and customer-centric purchase schemes – such as old gold exchange offers, lightweight options, and curated product launches – further supported consumer momentum".