India's love for gold continues to grow, as seen in the latest World Gold Council (WGC) data. In 2024, India's gold imports increased by 5% compared to the previous year, reaching 802.8 tonnes. This rise was largely driven by higher investment demand and significant purchases by the Reserve Bank of India (RBI). However, the soaring gold prices led to a slight drop in jewelry demand, which declined by 2% to 563.4 tonnes.

Why Are People Investing More in Gold?

One of the biggest reasons for the surge in gold investment was the uncertainty in other financial assets. In the first half of 2024, the Indian stock market gave moderate returns. Later in the year, after hitting record highs in September, it saw a sharp correction. As a result, many investors turned to gold, a traditionally safe investment option. This shift was reflected in the numbers: gold investment demand grew by 29% in 2024, reaching 239.4 tonnes. In the December quarter alone, it rose by 14% to 76 tonnes.

Many people have been cashing in their gold holdings with gold prices reaching record highs. The amount of gold exchanged for cash increased by 16% in the December quarter to 29.6 tonnes. The international gold price is currently hovering at an all-time high of $2,866 per ounce. In India’s wholesale market, 995-purity gold was priced at ₹83,985 per 10 grams, while pure 999-purity gold traded at ₹84,323 per 10 grams. Silver, too, was costly, trading at ₹95,421 per kg.

RBI’s Massive Gold Purchase: A Historic Move

A major highlight of 2024 was the RBI's aggressive gold-buying spree. The central bank added a record 73 tonnes of gold to its foreign exchange reserves - over four times the 16 tonnes it purchased in 2023. This move pushed the share of gold in India's forex reserves to an all-time high of 11%.

The trend of central banks buying gold wasn’t limited to India. Globally, central banks added 1,045 tonnes of gold to their reserves in 2024. The highest purchase in the fourth quarter came from the National Bank of Poland, which bought 90 tonnes. RBI was also among the leading buyers, acquiring gold every month until November.

For the first time since 2012, India’s gold demand was higher than China’s. The WGC report highlighted that China saw a slowdown in gold demand, while India's demand remained strong despite high prices.

Outlook for 2025: Experts predict that India’s gold demand for 2025 will be between 700-800 tonnes. Sachin Jain, the regional CEO of the WGC, noted that gold investment in India has reached its highest level since 2013. He also pointed out that e-commerce platforms in major cities have made gold more accessible, with quick delivery options for small gold bars and coins.

While gold jewellery demand is expected to pick up in 2025, especially for weddings, it will depend on price stability. Meanwhile, gold investments are likely to remain strong, with retail investors showing growing interest in gold ETFs, digital gold, and physical gold in the form of coins and bars.

Gold Imports Under Control Despite Lower Duties

Interestingly, even though India reduced gold import duties in July 2024, total net gold imports actually fell by 49% to 712.1 tonnes. This suggests that high gold prices discouraged large-scale imports, keeping overall gold imports in check.

Gold continues to be an essential part of India's financial ecosystem. Whether it's RBI boosting its reserves, investors seeking safety in uncertain times, or individuals cashing in on high prices, gold remains deeply embedded in India's economic landscape. As we move into 2025, all eyes will be on how gold prices behave and how investors respond to market conditions.