Gold Demand Dynamics in Asia: Navigating Regional Trends in India and China

The global gold market has long been anchored by Asia, where cultural traditions and economic shifts converge to shape demand. In 2023–2025, India and China-accounting for over 50% of global gold consumption-have exhibited divergent yet interconnected trends. While India's festive season (September–November) continues to drive robust jewelry demand, record-high prices have tempered enthusiasm, pushing consumers toward investment vehicles like ETFs and digital gold. Meanwhile, China's post-holiday demand has softened, but its appetite for physical bullion and geopolitical safe-haven assets remains strong. For investors, these dynamics present nuanced opportunities to navigate shifting consumer behavior and holiday cycles through strategic allocations.

India: Festive Demand Erodes, Investment Channels Surge

India's gold market is a study in contrasts. Traditionally, festivals like Diwali and Dussehra have fueled jewelry purchases, with gold symbolizing prosperity and auspiciousness. However, 2025 has seen prices reach 109,840 rupees per 10 grams-a record high-that has curtailed jewelry demand by 10–15% compared to prior years, according to a World Gold Council report. Consumers are increasingly opting for lightweight 18K gold jewelry and digital gold platforms, according to a Discovery Alert analysis.

Yet, investment demand has surged. By September 2025, Indian gold ETFs had amassed $10 billion in assets under management (AUM), according to a Discovery Alert report, with $902 million in inflows for the month alone-adding 7.3 tons of gold to holdings. This growth is fueled by gold's 60% year-to-date return in 2025, far outpacing the Nifty 50 Index's 6% gain, the report notes. Urban investors, particularly younger demographics, are embracing ETFs for their liquidity and lower transaction costs, while institutional players diversify portfolios to hedge against inflation and geopolitical risks, the Discovery Alert report adds.

China: Subdued Jewelry Demand, Resilient Investment Appetite

China's gold demand has taken a different trajectory. Post-holiday periods in 2025 have seen muted jewelry consumption, as high prices dampen discretionary spending, the World Gold Council found. However, investment demand-particularly for gold bars and coins-has remained resilient. February 2025 marked a record for Chinese gold ETFs, with RMB14 billion ($1.9 billion) in inflows, pushing AUM to RMB89 billion ($12 billion) and holdings to 131 tons, according to a World Gold Council update.

This shift reflects China's broader embrace of gold as a safe-haven asset amid U.S.-China trade tensions and global uncertainty. Geopolitical risks, coupled with expectations of sustained gold price gains, have driven institutional and retail investors to physical bullion and ETFs, the update notes. Unlike India's digital-first approach, China's investment growth has been more concentrated in traditional physical forms, though ETFs are gaining traction as a modern alternative.

Strategic Allocation: Balancing Cultural and Economic Forces

For investors, the interplay of cultural traditions and economic realities in India and China offers a unique lens for portfolio diversification. Gold's dual role as a cultural asset and a financial hedge makes it a compelling addition to portfolios, particularly in volatile markets.

In India, the rise of gold ETFs and digital platforms underscores a structural shift toward accessible, liquid investment vehicles. Financial advisors increasingly recommend ETFs for their ability to mitigate storage costs and provide exposure to gold's price action without the logistical challenges of physical ownership, the Discovery Alert report observes. Meanwhile, China's focus on physical bullion highlights the enduring appeal of tangible assets in a market where trust in digital systems remains uneven.

Geopolitical factors further amplify gold's strategic value. As U.S.-China trade tensions persist, gold serves as a hedge against currency devaluation and trade policy shocks. For Non-Resident Indians (NRIs), allocating to gold-whether through Indian ETFs or Chinese bullion-offers a way to balance exposure to global and domestic markets, according to an Economic Times interview.

Conclusion: A Dual-Track Strategy for Asian Gold Markets

The divergent paths of India and China in 2023–2025 underscore the importance of a dual-track approach to gold investment. In India, the focus should remain on ETFs and digital gold, which align with evolving consumer preferences and urbanization trends. In China, physical bullion and ETFs offer complementary opportunities, particularly as geopolitical risks persist.

For global investors, the key lies in understanding these regional nuances. By leveraging India's technological innovation in gold investment and China's resilient demand for physical assets, portfolios can achieve both diversification and resilience. As the World Gold Council notes, the combined demand of these two nations will continue to shape global gold markets-a dynamic that investors cannot afford to ignore.