Gold has entered a structurally higher price zone, reshaping the bullion ecosystem worldwide. Earlier this year, international prices breached the $3,000/oz mark and continue to remain elevated as investors hedge against global debt, geopolitical frictions and expectations of monetary easing in the US. Central banks have also reinforced demand, adding to their reserves to diversify away from the dollar. These dynamics have created a firm floor under prices.

For India, these global movements have translated into domestic gold prices hovering around ₹1,01–1,02 lakh per 10 gm, close to record highs. Naturally, consumer behaviour has shifted. More households are exchanging old jewellery, jewellers are designing lighter pieces with lower karatage, and investors are increasingly considering financial gold products. While high prices often dampen demand, Indian households’ cultural and financial affinity for gold remains unshaken, particularly in the festive and wedding seasons.

Domestically, government policy has played a decisive role in reshaping the market. The Union Budget’s bold cut in import duty from a cumulative 15 per cent to 6 per cent for refined gold and 5.35 per cent for gold doré has been the most significant structural reform in a decade. This move has curbed smuggling, shifted volumes back into legal channels and allowed organised retailers to operate in a more transparent environment. With official imports rising despite steady overall demand, the long-term impact of this measure is clearly positive.

Beefing up standards

At the same time, hallmarking and quality control are being strengthened. The Bureau of Indian Standards (BIS) has announced the extension of hallmarking to 9K gold from July 2025 and introduced HUID-based hallmarking for silver from September 2025. These steps will formalise quality standards across product ranges, particularly as consumers adapt to higher prices by buying lower-karat jewellery. For the industry, these regulations ensure greater trust, reduce disputes and protect long-term consumer confidence in gold as an asset class.

The India International Bullion Exchange (IIBX) has also begun to take shape as a market infrastructure hub. In recent months, it launched trading in gold and silver futures, signalling the potential to deepen India’s integration into global price discovery. If liquidity and participation expand, the exchange can provide jewellers and exporters with effective hedging tools, lower basis risks and enable more efficient capital deployment. Over time, a robust bullion exchange can help India transition from being a price taker to playing a more active role in global markets.

Despite structural improvements, challenges persist—particularly for exporters. Jewellery manufacturers catering to overseas markets are grappling with a difficult environment. Elevated global gold prices have raised inventory costs, while the recent US tariffs on Indian goods have added fresh uncertainty. Although higher duty-drawback rates announced this year offer some relief, exporters will need to diversify markets, strengthen risk management and innovate with higher-margin categories such as studded and branded collections to remain competitive.

Five priorities

On the demand side, investment trends have offered some resilience. Globally, exchange-traded funds (ETFs) and central bank purchases are driving sustained flows into bullion. In India, the government’s Sovereign Gold Bonds (SGBs) remain an attractive alternative for investors, combining the cultural appeal of gold with financial benefits such as interest income and capital gains tax exemptions at maturity. These instruments not only strengthen household portfolios but also channel savings into formal, productive avenues reducing reliance on physical imports.

The Reserve Bank of India (RBI) itself has steadily increased its gold holdings, reflecting a broader global shift among central banks. A higher share of gold in reserves helps diversify against currency volatility, particularly at a time of heightened global economic uncertainty. For the domestic bullion ecosystem, this underscores the importance of gold as both a cultural asset and a strategic financial anchor.

Looking ahead, five priorities are critical for India’s bullion ecosystem. First, policy stability is essential. The recent import duty cut has been effective in reducing unofficial inflows, and businesses now need a predictable framework to plan inventory cycles and hedging strategies. Second, the expansion of hallmarking and HUID must be scaled up seamlessly to prevent bottlenecks and ensure smooth adoption by consumers and retailers. Third, liquidity and accessibility at IIBX must deepen so that it becomes a genuine hub for price discovery and risk management. Fourth, industry-wide professionalisation of risk practices, including hedging, credit insurance and inventory management is needed in a high-price, high-volatility environment. Finally, broadening formal investment channels such as SGBs will ensure household savings continue to flow into gold while also supporting national financial stability.

The road ahead is challenging but filled with opportunity. India has already undertaken major reforms that have shifted the bullion sector onto a more transparent and resilient footing. With disciplined execution on policy, regulation, market infrastructure and risk management India can transform its bullion ecosystem into one that not only withstands global and domestic pressures but also emerges as a leader in transparency, liquidity and consumer trust.

Gold will remain central to Indian households and financial markets. The task before us is to adapt to a high-price regime while building structures that make the sector stronger, more competitive and future-ready. By doing so, India can preserve its timeless relationship with gold while also positioning itself as a global force in bullion markets.

(The author is former National President, India Bullion and Jewellers Association (IBJA) and CEO, Aspect Global Ventures)

Published on September 6, 2025