India's gold investment demand surges above $10 billion in Q3, pension funds can now invest up to 5% in gold and silver ETFs
Record-high gold prices may be depressing jewelry demand, but they are only encouraging Indian investors to buy more bars and coins, with a record $10 billion purchased in the third quarter, according to Sachin Jain, CEO of India operations at the World Gold Council.
Jain said on Thursday that gold has now become a mainstream asset as even Indian investors with little prior exposure diversify their portfolios and boost allocations to the yellow metal – and the trend is only expected to build.
"We believe investors' interest in gold will continue and grow in the coming quarters," he said.
Investment demand in India – the world's second-largest gold market – rose 20% year over year in the third quarter to 91.6 tonnes, but rose 67% in value terms to $10.2 billion, the WGC said. However, overall gold consumption still fell 16% to 209.4 tonnes as jewelry demand dropped 31% to 117.7 tonnes amid record-high prices. Investment demand accounted for 40% of total gold consumption in the first nine months of 2025, according to WGC data, which is the highest proportion on record.
And Jain said the WGC is projecting Q4 demand to exceed that of the third quarter, supported by festivals and wedding season purchases. He added, however, that total physical gold demand in 2025 will likely come in between 600 and 700 tonnes, the lowest level since 2020 and well below last year's 802.8 tonnes.
Jain also noted that physically backed gold exchange-traded funds are gaining market share amid the precious metals rally. Inflows into gold ETFs set new records in September, according to data compiled by the Association of Mutual Funds in India (AMFI).
And these flows are almost certain to climb higher, as Indian pension funds are now allowed to invest in gold and silver ETFs.
On Wednesday, the Pension Fund Regulatory and Development Authority (PFRDA) announced that they have revised investment guidelines for the National Pension System (NPS) and Unified Pension System (UPS) to enable pension fund managers (PFMs) to include gold and silver exchange-traded funds to further align the norms with subscriber appetite for higher returns while balancing the risks.
According to the revised norms, a new sub-category was introduced for the government sector under ‘Asset Backed, Trust Structured and Miscellaneous Investments’ to allow investment in regulated gold and silver ETFs. The aggregate investment in gold and silver ETFs is limited to 1% of AUM.
For private sector subscribers, the PFRDA now allows investment in gold and silver ETFs of up to 5% of AUM.
The regulator also now allows both the government and non-government sector pension fund subscribers to invest in the top 250 listed company stocks, up from the top 200.
