Page 21 - Bullion World Volume 03 Issue 07 July 2022

Bullion World | Volume 5 | Issue 09 | September 2025

this is insufficient to offset demand growth . The 2024
deficit stood at 148.9 million ounces, while the 2025
shortfall is forecast at nearly 118 million ounces.
Analysts caution that silver’s volatility will likely remain INDIA
higher than gold’s, given its dual role as an investment
and an industrial input. Nevertheless, structural deficits While cultural demand for jewellery remains
and expanding green-energy demand suggest that the backbone of consumption in India, recent
silver could outperform gold in percentage terms over data highlight the growing financialisation of
the medium term, with some projections targeting the gold holdings. In Q2 2025, overall gold demand
USD 38 to 40 per ounce range before year-end. fell by ten per cent year-on-year to 135 tonnes,
though in financial terms, demand rose by 30
Major markets in Asia: per cent because of higher prices . At the same
The demand narratives time, jewellery consumption was exceptionally
constrained, with buyers delaying purchases or
shifting to lighter products. By June 2025, Indian
gold ETFs held 66.7 tonnes, with assets under
CHINA management rising 42 per cent year-on-year to
nearly INR 648 billion . This represents a significant
China remains the global gold demand anchor, leap from 28 tonnes at the end of 2020 and 38
reflecting cultural affinity and strategic policy tonnes in 2022.
choices. Jewellery demand softened in 2025, falling
to approximately 69 tonnes in Q2, as high prices Historically, Indian demand displays strong
curtailed retail consumption, and this became seasonality, with festive windows significantly lifting
the fifth straight quarter of double-digit declines jewellery consumption. Traders report that when
. Imports corroborate this weakness, with June rupee gold prices dip, dealer discounts narrow
shipments halving month-on-month to 50 tonnes and and footfall improves. Hence, Q4 2025 may see
H1 imports down 62% year-on-year. stronger jewellery demand if global and rupee-
denominated prices stabilise . Although elevated
Nevertheless, the downfall was offset by resilient prices have dampened physical jewellery purchases,
investment flows. Chinese bar and coin demand particularly in rural markets where affordability is
exceeded 115 tonnes in the same quarter, reflecting most sensitive, policy initiatives, including facilitating
investor appetite for tangible assets amidst financial digital gold investment and integrating the IIBX,
uncertainty. Equally significant has been the are reshaping the structure of Indian gold demand.
People’s Bank of China’s steady accumulation of Over the medium term, India will likely see a steady
gold reserves, which now exceed 2,300 tonnes . rebalancing between physical and financial demand
This policy has been interpreted as a diversification channels.
strategy away from the U.S. dollar and as a hedge
against global financial instability. The combination In terms of silver, with more than half of its silver
of official and private investment channels ensures needs met by imports, the country is highly exposed
that China will continue to play an outsized role in to global market dynamics. With industrial silver
shaping the global gold market. China has shifted use continuing to rise worldwide, India faces higher
from adornment to an explicitly financial and import costs and heightened competition for supply.
policy-driven asset. Unless prices undergo a sharp This has strategic implications for its renewable-
correction, jewellery will remain structurally weak, energy ambitions, since silver is a key input for PV
but investment and official sector demand will capacity expansion.
continue to anchor aggregate consumption.

10. Gold Demand Trends: Q2 2025
11. Mukherjee, A. A. (2025)
12. Gold Demand Trends: Q2 2025
13. China’s central bank adds gold in nine-month buying streak, Bloomberg, https://www.bloomberg.com/news/articles/2025-08-07/china-s-central-bank-
adds-gold-in-nine-month-buying-streak
14. Gold Demand Trends: Q2 2025

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