📰Gold Rally... or Crisis? | Daily India Briefing

The rally in gold, now $5,000 (₹457,000) an ounce, has had serious repercussions for the world’s second largest gold consumer, India. Today, we explain more.

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Macro

• Indian LNG buyers are stalling deals until 2028 while waiting for supply to grow. LNG is going to hit a supercycle with infrastructure buildout resulting in 50 percent higher supply by the end of the decade than current amounts. India has planned to double its gas energy use to 15 percent of energy mix by 2030, but has struggled to do so due to costs.  

• BNP Paribas says India's economy showed significant signs of growth in December, particularly in urban areas. Indicators like credit and deposit growth, industrial output, auto sales, port activity, fuel use, consumer sentiment, and urban demand all grew. Rural growth remains mixed. 

• Russian oil has remained resilient due to deep discounts over Brent. Energy Minister Puri said the market continues to be the determinant for India’s purchases. Still, imports have fallen by 700,000 barrels per day and India now has 41 oil sources compared to 27 from a few years ago.

Equities

• India's IPO market started off with some weakness, only raising $440 million (₹40.2 billion) in January. Weakness in domestic markets has put a 100 listings on hold but bankers are optimistic that the budget announcement on February 1st will release a wave of new offerings. 

• Adani's listed companies lost $13 billion (₹1.2 trillion) in market cap after the SEC announced pushing for its case. This is the steepest loss the company has suffered since November 2024. The group said lawyers representing Gautam Adani and Adani Green Energy are in talks with the SEC this week.  

• Hindustan Zinc, overexposed to silver prices, climbed 40 percent over the last 3 months. It passed JSW to become India’s most valuable metals company even though metals trading is becoming increasingly volatile.

Alts

• Blackstone and Carlyle are looking for cricket stakes through teams RCB and the Rajasthan Royals. Both teams are valued at around $1.2 billion (₹109.7 billion) though the lack of deals in the space makes valuation tricky. The profit-sharing system of the IPL is similar to the NFL and is advantageous for PE firms due to the various avenues to earn cash.

Policy

• Canada's Energy Minister Tom Hodgson is heading to India. Canada doubled down on its efforts to work with China and India, to Trump’s chagrin. Trade Minister Anita Anand said Canada has no choice but to double its non-US imports over the next 10 years. Hodgson will work on cooperation regarding critical minerals, uranium, and LNG.

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Gold Rally… or Crisis?

In terms of private household consumption, India is the world’s second largest consumer of gold, buying 462 tonnes in the first three quarters of 2025 (the first is China). But, the recent rally in the safe haven asset, driven by central banks and other institutional buyers looking for an alternative to the steeply declining U.S. dollar, has most everyday Indian purchases rethinking the prized commodity. Gold is now worth over $5,000 (₹457,000) an ounce. This means for traditional jewelry markets from Jaipur to Bangalore, typically choked with wedding-season crowds, are completely empty. 

For millions of households, gold is not a luxury but a social obligation, especially around marriage. The recent surge has turned that obligation into a financial strain. Lower-income families planning weddings in the coming months are finding that long-saved budgets no longer stretch far enough. Bargaining, once central to the ritual of buying jewelry, has become meaningless when prices feel untethered from incomes.

The damage runs deeper than subdued foot traffic. Small jewelers, already operating on thin margins and limited credit, are being battered by volatility. Restocking inventory after sharp price jumps is prohibitively expensive, while any sudden correction risks wiping out profits. Add to that limited credit from the banking system with prohibitive rates and collateral requirements, and inventory is impossible to finance. Several have simply shut down, unable to survive the whiplash. Those still operating report a clear shift in consumer behavior toward lighter pieces, lower-purity gold in 18-carats, and purchases restricted to weddings or major festivals.

Yet gold itself has not fallen out of favor: demand is migrating away from bazaars and into financial markets. Trading volumes in gold- and silver-backed ETFs have jumped sharply, according to industry executives. MMTC-PAMP, one of India’s largest metals refiner, says that ETF demand has completely outpaced traditional shops and they have supplied more metal to ETFs than ever. While a seemingly normal statement in most countries, the news is an extraordinary reversal in a country long defined by physical ownership.

See you tomorrow.

Written by Yash Tibrewal. Edited by Shreyas Sinha.

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