‘Gold doesn’t grow your wealth…’: CA on Indians buying gold jewellery amid yellow metal rally

Indians are one of the largest consumers of gold in the world. So, how are Indians using gold? Mostly as jewellery. About half of the annual demand for gold in India comes from gold jewellery. India’s jewellery consumption stood at 563.4 tons in 2024, surpassing China’s 511.4 tons and reinforcing the South Asian country’s position as the world’s largest gold consumer in this segment.

India’s total gold demand rose 5% year-on-year to 802.8 tons in 2024, up from 761 tons in 2023, driven by higher jewellery purchases and a sharp uptick in investment buying as consumers looked to benefit from rising prices.

Investment demand alone soared to 240 tons in 2024, a significant jump from 185 tons the previous year, as both retail buyers and investors flocked to gold amid its price rally.

Yet despite this robust demand, financial experts urge caution. According to CA. Abhishek Walia, an investment advisor, there’s a critical distinction Indians often miss: buying gold is not the same as investing in it.

“Gold is deeply embedded in our culture and traditions, especially around weddings and festivals,” says Walia. “But financially, it’s not always the smartest way to grow your wealth.”

He explains that while gold retains value over time, it’s not a productive asset. “Unlike stocks that pay dividends, property that earns rent, or bonds that generate interest, gold just sits in a locker,” Walia says.

One major issue is the hidden cost of buying jewellery. “People don’t realise that 20-30% of their money is lost immediately to making charges,” Walia points out. “If you’re buying jewellery thinking it’s an investment, you’re starting at a loss.”

Liquidity is another concern. Though gold is often viewed as a safety net for emergencies, converting it to cash can mean accepting lower-than-market prices because of purity checks and dealer deductions. “Gold isn’t as liquid as people believe, especially if you want to get full value quickly,” he adds.

Security is equally problematic. “Families often have gold worth lakhs tucked away in lockers, uninsured and untracked. That’s risky wealth management,” warns Walia.

So, what’s the smarter approach? Walia advises Indians to be intentional with gold purchases. “Buy gold for emotional reasons or safety—but don’t mistake that for financial investment,” he says.

He recommends alternatives like Gold ETFs for those truly seeking investment exposure. “Gold ETFs give you price exposure without storage hassles and making charges. They’re liquid, transparent, and cost-effective.”

Ultimately, Walia urges people to balance gold with assets that genuinely compound wealth over time. “Gold should be part of your portfolio—but not the entire plan. Equities, mutual funds, and retirement schemes like NPS can help your money grow. Investing is about building wealth, not just holding tradition.”

On Monday, gold prices staged a recovery in the final trading session of the first quarter, after slipping sharply in the previous session. On Friday, the yellow metal had plunged nearly Rs 1,500 per 10 grams intraday. However, in Monday’s session, gold rebounded, rising by Rs 550 per 10 grams to settle at Rs 96,014 on the MCX.

The bounce in gold prices came as global markets, excluding the US, mostly traded lower. Meanwhile, Indian equities also ended in the red, with the Sensex dropping 452 points to close at 83,606, and the Nifty slipping 121 points to finish at 25,517.

Gold and equities often share an inverse relationship, where declines in stock markets tend to push investors towards gold as a safe haven. In Monday’s session, heightened risk aversion due to weaker equity performance spurred fresh demand for the precious metal.

This renewed interest in gold highlights its enduring role as a security blanket for investors seeking protection amid market volatility and economic uncertainty.