Festive seasons in India — Diwali, Dussehra, Akshaya Tritiya, weddings — have historically been synonymous with gold. For generations, buying gold at festivals has been part ritual, part wealth-building habit. But investors in 2025 face a different picture: record prices, shifting demand patterns, new financial products and a stronger case for diversification. This article looks at the facts, explains the forces at work, and gives modern, practical guidance on whether gold still deserves pride of place in your festive shopping list.
Where gold stands today: prices and demand
Gold prices have climbed sharply through 2024–2025 and reached fresh highs in 2025. In India, daily retail quotes have moved well above earlier record levels — for example, one price aggregator listed 24-carat gold at about ₹11,029 per gram (≈ ₹1,10,290 per 10 g) on 9 September 2025.
That rise in prices has had a visible effect on consumption patterns. The World Gold Council (WGC) and market reports show jewellery demand softening while investment demand — bars, coins and ETFs — has held up or even strengthened in parts of 2024–25. WGC updates also show India’s overall gold consumption being pressured by higher local prices, with forecasts in 2025 pointing to a somewhat lower range than 2024’s totals.
At the same time, headline reporting from major outlets has highlighted weaker festival-season physical buying in some pockets of India in 2025, with industry groups reporting notable declines during early festive legs. That kind of muted festive buying — despite cultural preference for gold — is a signal of strained affordability at higher price levels.
So — is gold a good investment right now?
Short answer: it depends on your objective. Gold plays different roles in a portfolio and in Indian life:
- Cultural/gifting role. For weddings and festivals, gold is an enduring social asset. Its use as jewellery and a family heirloom is unlikely to disappear soon — people buy it for reasons beyond returns.
- Inflation hedge and crisis hedge. Gold has historically performed as a partial hedge in periods of high inflation or financial stress, and many central banks continue to hold or buy gold as a reserve asset. Recent central-bank surveys show continuing, if variable, interest in managing gold reserves.
- Pure return play. Over some long windows gold has delivered strong returns; over others, equities have outperformed. Indian equity benchmarks have, over the past decade, generally outpaced gold in total returns, although gold outperformed during certain crisis years and remains competitive on longer multi-decade horizons in some analyses.
Put simply: if your goal is preserving purchasing power or hedging tail risk, a measured exposure to gold can make sense. If your goal is maximum long-term growth, equities (or a diversified mix including equities) have historically delivered higher returns in India.
What the data says: returns and demand patterns
- Two facts matter for a festival-season investor:
1. Price momentum and affordability. Rapid price rises make it more expensive to buy the same quantity of gold; that directly explains the drop in jewellery demand during some recent festive legs. Higher prices can also increase the volatility of near-term returns.
2. Asset performance versus alternatives. Over the last 10–15 years, Indian equity indices (measured on total return bases) have tended to beat gold on a CAGR basis, although gold’s performance has been impressive in several long windows and during market stress. That means the opportunity cost of parking a large share of savings in gold — instead of a diversified equity portfolio or other asset classes — is non-trivial for investors with long horizons.
How investor behaviour is changing
A few modern trends matter:
- Shift to financial gold products. Investors increasingly use gold ETFs, sovereign gold bonds (SGBs) and digital gold platforms to gain exposure without buying physical jewellery. These instruments offer lower transaction costs, easier storage and, in the case of SGBs, interest payments and capital-gains benefits. The shift reduces the practical need to buy physical gold during festivals. (WGC reporting highlights steady flows into Indian gold ETFs and higher investment demand for bars & coins.)
- Smart timing vs. emotion. Historically, festivals triggered impulse buys. Today’s investors — especially younger, urban ones — are more likely to split purchases, use price alerts, or choose financial gold to avoid immediate sentiment-driven buying at peak prices.
- Portfolio thinking. Professionals and DIY investors increasingly set rule-based allocations (e.g., 5–10% in gold) rather than “buy gold because it’s Diwali.” That reduces the temptation to time the market on cultural cues alone.
Practical, modern rules for festival buying
If you’re planning to buy gold this festive season, here’s a practical checklist that blends tradition with modern investing sense:
- Decide the purpose first. Buying for jewellery/gifting? Expect to pay a premium for design and making charges — treat that purchase as consumption, not an investment. Buying for investment/hedge? Prefer SGBs, gold ETFs or minted bars/coins with low markups.
- Set an allocation cap. Financial planners often suggest 5–10% of investable assets in gold as a hedge. Your exact number should reflect age, risk tolerance, and the rest of your portfolio (equity, debt, cash). (This is guidance, not a one-size-fits-all rule.)
- Avoid lump-sum timing if price is high. If gold prices are near record levels (as they were through parts of 2024–25), consider phased buying (staggered purchases) or using gold ETFs where you can SIP into it, smoothing entry price.
- Compare carry and tax. SGBs provide interest and capital-gains advantages on redemption after maturity; physical jewellery carries making charges and potential capital-gains tax on resale (plus liquidity and purity considerations). Evaluate total cost of ownership.
- Consider liquidity needs. Gold ETFs and SGBs are more liquid and easier to sell than jewellery, which may require assay and can incur resale discounts.
Festival psychology: what to watch for this season
Festivals still drive demand, but watch two signals closely:
- Retail premiums and supply/demand dynamics. When domestic premiums (the extra you pay above international spot) spike, that means local demand is strong and buying now could be at a premium; when premiums compress, buying is relatively cheaper. Reports in 2025 showed both record highs in headline prices and pockets of subdued buying — a mix that argues for disciplined buying rather than FOMO.
- Macro backdrop (rates, dollar, geopolitics). Gold tends to react to real interest rates, U.S. dollar moves and geopolitical risk. If central banks slow purchases or liquidity tightens, price dynamics can change quickly — so keep an eye on macro headlines rather than only festival mood.
Bottom line — should you buy gold this festival?
Yes — if your reasons are clear:
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Buy jewellery if it’s a meaningful cultural or sentimental purchase and you accept it as partially consumption (choose trusted sellers, check hallmarks).
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Buy financial gold (ETFs, SGBs, coins/bars) if you want a hedge or modest portfolio allocation without the extra cost of design/making.
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Don’t buy large quantities of gold solely because “it’s Diwali” if you’re aiming for high long-term returns — equities and other growth assets have historically outpaced gold in India over many multi-year stretches.
Gold is no longer a default, unquestioned investment decision for the festival season. Instead, it should be a considered choice: part cultural, part hedge, part strategic allocation. The modern investor treats gold as one tool among many — valued, but used with intention.
