Total consumer demand of gold in India increased to 802.8 tonnes in 2024, which is 26 per cent of the global gold demand taking India at second rank, next just to China with consumer demand of 815.4 tonnes, according to an SBI Research report on Wednesday.

Domestic supply of gold is only a fraction of the total supply of gold in India, with imports contributing around 86 per cent of the total supply in 2024 (the World Gold Council estimate). Gold imports increased around 31 per cent in FY24 and 27 per cent in FY25.

However, higher prices have led to lower demand of gold in 2025. In Q3 2025, consumer demand of gold declined by around 16 per cent year-on-year, driven by reduced jewellery demand, said the report by Dr. Soumya Kanti Ghosh, Group Chief Economic Advisor, SBI.

Higher prices have reduced gold imports by 9 per cent to $26.5 billion in the April-September period in FY26, from $29 billion during the same period in FY25.

“Another interesting trend visible is the increase in gold reserves by the central banks. The RBI gold reserves rose to 880 tonnes in 2025 as part of strategic reserve management,” said Dr Ghosh.

Return on gold has been comparable to equity market (Sensex) over a 5, 10 and 15-year period; however, it far exceeds market return over 1 year and 3 year period.

“Furthermore, the recent discoveries of new gold mines in various districts of Odisha as Deogarh, Keonjhar, Mayurbhanj (with an estimated 1,685 kg of gold ore detected by the GSI) among others, Jabalpur in Madhya Pradesh (estimated quantity could run into lakhs of tonnes) and Kurnool district in Andhra Pradesh (India’s first large private gold mine expected to produce 750 kg of gold annually) could help ease the pressure on imports and are positive for our current account balance,” the report noted.

The government started issuing Sovereign Gold Bonds (SGBs) in November 2015 and continued issuing 67 tranches, with the last one issued in February 2024.

As of October 23, outstanding SGBs stand at 125.3 tonnes. Taking into account the redemption price of Rs 12,704 announced for 2017-18 Series IV the total cost to the Government would be Rs 1.59 lakh crore.

“When the issue of these units is taken into account it amounted to Rs 65,885 crore. Thus, it amounts to Rs 93,284 crore loss to the Government on account of increase in gold price,” the report noted.