In three to six months, the World Gold Council will release a framework through which Indian investors can use their holdings in gold exchange-traded funds to buy jewellery. The proposal has been submitted to the Securities and Exchange Board of India and the Association of Mutual Funds in India and a trial will be carried out soon, Sachin Jain, regional chief executive officer, India, at the World Gold Council, told Informist.

"This is something that is an ongoing work," Jain said. The team has still to figure out the nuances of the process as retail jewellers operate well beyond equity market hours. "We are trying to get some solutions around it. It is still under development." So if an investor is holding 100 grams in a gold ETF, the investor can transfer it to a jeweller's account and receive gold jewellery instead, Jain explained in an interaction.

ETFs are gaining traction with the recent sharp rise in gold prices and Jain believes "ETF is really at the cusp of growth". "I think as we move forward, as the investor class gets younger, their relationship with their phone is much more deeper, everybody will be happier to own assets sitting on their phones," he said. "I think all those elements completely indicate that products like ETFs have a strong future in our country's consumption (of gold)."

Surging gold prices have dented the consumption of gold jewellery but raised investment demand for the precious metal. Jain said assets under management of gold ETFs at the beginning of 2024 were about 40 tonnes, which rose to 56 tonnes at the start of 2025. As of Oct. 23, however, Indian gold ETFs' assets under management were at 86 tonnes. During the September quarter alone, inflows into Indian gold ETFs were at $1.2 billion and assets under management as of Sept. 30 were $10 billion. Gold holdings of Indian ETFs as of Sept. 30 were 77.3 tonnes.

The council sees India's gold demand at 600-700 tonnes for 2025, lower than 700-800 tonnes expected at the beginning of the year, as prices shot up. Despite the recent correction in gold prices, Jain stuck to the council's forecast of 600-700 tonnes for the year, saying total demand will be towards the higher end of the forecast range after a good festive season.

Of the anticipated 700 tonnes of demand, demand in Jan-Sept was down 14% on year at 462.4 tonnes, with 277.9 tonnes as jewellery and 184.5 tonnes as investment. During the September quarter, the demand for gold jewellery in the country fell 31% on year to 117.7 tonnes while demand for gold bars and coins, which is investment demand, was up 20% at 91.6 tonnes.

India's total gold demand in the December quarter is likely to be around 238 tonnes, according to the council. "Normally we have seen about 30-40?mand comes in from investment and about 60-70% from jewellery," Jain said. "That's what we've seen historically and we think that's probably what it's going to be."

The rise in gold prices has also resulted in increased acceptance of 18-carat plain jewellery at the expense of the traditional 22-carat jewellery across many parts of the country. Furthermore, there appears to be evidence that demand is shifting away from jewellery towards lower-margin, small-investment products like ETFs.

However, the 9-carat jewellery segment is yet to gain traction. "We have not really got any indication that 9-carat jewellery has taken off," Jain said. "It's a new introduction. And the reason why gold has been making the highlights is because of the value that gold holds and the fact that 22-carat and 18-carat still dominate." The new 9-carat and 14-carat jewellery will take much longer to become important segments in the jewellery business, he added.

Courtesy : Informist media