India just bought more gold for investing than jewellery

Summary: For the first time ever, Indians are buying more gold to invest than to wear. This historic shift cements gold’s growing place in investor portfolios. But before you follow the rush, understand how gold really behaves across market cycles and where it fits in a portfolio.

For the first time in history, India has bought more gold for investing than for jewellery, a World Gold Council executive told news agency Reuters on Wednesday.

In the January-March quarter, India, the second-largest consumer after China, consumed 82 tonnes of gold for investments (gold ETFs plus gold coins and bars), compared to 66 tonnes for jewellery, according to the council’s latest report.

The demand for bars and coins (62 tonnes) was almost at par with jewellery, while gold used by ETFs reached a record high of 20 tonnes. Gold jewellery volumes, meanwhile, dipped 19 per cent from the previous year as soaring prices hit retail demand.

As a result, jewellery’s share in total consumption fell to around 30 per cent, the lowest since data available from 2002. Investments thus made up nearly 70 per cent of total gold demand. 

One-third of global ETF gold demand came from India

As equity markets remained on the back foot, gold ETFs saw the highest-ever monthly inflows of Rs 24,040 crore in January 2026.

India, as a result, made up 32 per cent of gold demand by ETFs globally during the quarter, making it second only to China.

However, ETF inflows slowed sharply in February and March, falling over 80 per cent from January’s peak as a correction triggered profit-taking.

Gold’s long-term performance record

The excitement is still not without basis. The surge in investor inflows tracks the yellow metal’s dazzling returns in recent years. Gold mutual funds on average returned nearly 74 per cent in 2025 compared to large-cap funds’ muted 9 per cent. 

However, when you look at whether gold has always outshone equity with consistency over the long term, the picture looks different. Our five-year rolling return analysis shows this. 

If you had held an average gold fund for any five years between June 2005 and today, there was a nearly 10 per cent chance your investment would make a loss. Compare that with an average large-cap fund where the probability of negative returns was a paltry 0.5 per cent.

This shows how equity, even with all its short-term turbulence, has been far more reliable over five-year horizons.

Gold, meanwhile, can disappoint for long stretches. Zoom out further, and the picture sharpens.

Since 1981, gold has outperformed the Sensex over a five-year horizon only three times: 2006–2010, 2016–2020 and 2021–2025. Three periods in over four decades. Each one coincided with a phase of equity market stress.

This is the pattern worth understanding. Gold outperforms during specific, identifiable windows when equity is under stress. This also explains the recent rush. Investors tend to flock to the yellow metal, driven by momentum more than anything else.

What we at Value Research suggest readers

Gold is not a productive asset. Over the long run, equity has outperformed it decisively. Gold's genuine value is that it tends to hold its ground, or rise, when equity falls. That makes it a cushion, not an engine.

So keep it as a diversifier. Cap it at around 10 per cent of your total portfolio and resist the urge to increase it every time headlines remind you of last year's returns.

If you want to own gold through ETFs, the most cost-efficient form, get the list of Gold ETFs recommended by our seasoned analysts at Value Research Fund Advisor. They pick out those that pass all checks on a variety of parameters like tracking error, expense ratio, trading liquidity, etc.

Try Fund Advisor today