Global gold ETF holdings jump 801 MT; ETF share in consumption surges to 16% in CY25 from near zero: Report

Global gold ETF holdings grew 801 MT, the second highest on recor,deven as bar and coin buying accelerated to reach a 12-year high driven by safe-haven and diversification motives. However, composition of gold consumption globally has undergone a structural shift, the share of ETFs in consumption has surged to 16% in CY25 against 0% in CY24, according to a release by CareEdge Ratings.

The release further highlighted that the share of jewellery fell by nearly 19% y-o-y to 33% in CY25, much below the 15-year average of 50% – as consumers responded to elevated prices by reducing discretionary jewellery purchases. The trend is visible in the Indian market as well where the share of jewellery consumption fell below 60% of total gold purchases in CY25 compared to long-term average of 70%.

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Investment share in India’s gold consumption rises to 42% in CY25 from 29% in CY24. Investment demand surged to record levels globally and in India led by gold ETFs and bar-and-coin buying, reflecting safe-haven demand, diversification motives and geopolitical uncertainty.

Globally, annual investment demand at 2,175 MT in CY25 smashed the previous record of 1,805 MT in CY20 led by ETF investment which contributed over 800 MT with factors including diversification considerations, elevated geopolitical risks and safe-haven demand supporting demand. The trend is also evident in India with strong ETF investments by Indians in the last two years, adding 37.5 tonnes in CY25, more than the combined investment in the last 10 years.

The global gold demand reached an all-time high in CY25, rising nearly 8% y-o-y to 5,000 metric tonnes (MT), driven primarily by robust investment demand despite sharply higher gold prices and macroeconomic headwinds. Central banks continued large-scale gold accumulation for the fourth consecutive year, underscoring gold’s role in reserve diversification amid geopolitical challenges.

“Gold consumption patterns are witnessing a structural shift, with jewellery accounting for less than 60% of India’s total gold purchases in CY25, compared to a long term average of ~70%. Geopolitical uncertainty, momentum in gold prices and portfolio diversification preferences are expected to continue fuelling investment demand for gold, with its share in overall gold consumption is projected at 35-40% in FY27,” said Akhil Goyal, Director, CareEdge Ratings.

Gold prices have entered a more durable high-price regime supported not by short-term speculative flows but by structural demand shifts, sustained official sector buying and persistent global macroeconomic and geopolitical uncertainty.

The release also highlighted that Indian jewellery demand remains resilient despite record gold prices with jewellery purchases rising 10% y-o-y to Rs 4.8 lakh crore in CY25, reflecting consumers’ willingness to allocate higher wallet share to jewellery.

Indians’ total spending on jewellery purchases has grown at a healthy compounded annual growth rate (CAGR) of 11% over CY21-CY25 indicating continued appetite for the yellow metal. Though on value basis demand remained resilient, volume has declined by 15% in CY25, which is reflective of the price-sensitive nature of jewellery demand, where preferences shifted towards lower-carat/lighter-weight jewellery.

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“Domestic organised jewellery retailers are expected to report revenue growth of over 35% year‑on‑year in FY26, driven by steady consumer appetite for jewellery despite rising gold prices, market‑share gains from accelerated sector formalisation and planned store additions,” said Raunak Modi, Assistant Director, CareEdge Ratings.

“This momentum is likely to continue in FY27, with revenue growth projected at 20–25% year‑on‑year. Operating profit margin is also likely to expand by 180-200 bps in FY26 supported by inventory gains, which is likely to normalise to 6.5-7% in FY27 led by expectations of range-bound gold prices and front-loaded operating expenses on new stores,” Modi further said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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