ADVERTISEMENT
As the largest democracy in the world goes to polls in the second half of this month, speculations are rife about its ramifications on the national and global economy. A recent report by the World Gold Council has examined the impact of India's General Elections on gold, using data gathered from over two decades.
While the uninitiated may construe this exercise to stem from the compulsive trait of Apophenia or Patternicity, which is the tendency to see meaningful connections between unrelated things, mere Patternicity may not exist in this case. India's polity and policy not only have a high influence in the gold market due to its humongous population that buys gold almost like a mandatory asset but also because the Indian Central Bank has historically been among the top ten buyers of gold for many years.
August 2025
As India continues to be the world’s fastest-growing major economy, Fortune India presents its special issue on the nation’s Top 100 Billionaires. Curated in partnership with Waterfield Advisors, this year’s list reflects a slight decline in the number of dollar billionaires—from 185 to 182—even as the entry threshold for the Top 100 rose to ₹24,283 crore, up from ₹22,739 crore last year. From stalwarts like Mukesh Ambani, Gautam Adani, and the Mistry family, who continue to lead the list, to major gainers such as Sunil Mittal and Kumar Mangalam Birla, the issue goes beyond the numbers to explore the resilience, ambition, and strategic foresight that define India’s wealth creators. Read their compelling stories in the latest issue of Fortune India. On stands now.
An interesting pattern has emerged between the consumption of gold in India and the Lok Sabha Poll. Historic data reveals the consumption of gold takes a hit in the election phase when India is in the midst of voting.
General election’s impact on gold consumption:
The World Gold Council data says there has been a reduction of year-on- year (YoY) demand in the second quarter of the General Elections year compared to the same quarter of the previous year. Data shows gold consumption fell during three of the last four general election periods (April to June), with a decline in demand for jewellery, comprising over 70% of Indian consumer demand, as well as bar and coin.
As per the World Gold Council, in 2004 the change in YoY demand in the April-June period was -2%. In 2009, the YoY change in demand was -12%. In 2014, it was about -36%. The only deviation from the norm was Election Year 2019, when YoY change in demand was 12%. The report states that the deviation in 2019 was due to the higher number of auspicious days and a softening of gold prices during that period.
What’s on the cards for gold in the coming months?
During this Election Quarter of 2024, there are multiple factors that indicate a fall in the overall demand for gold, the most crucial being the price. The high price of gold has already resulted in a subdued demand for gold jewellery even during the wedding season. Currently, gold is trading above ₹71,650 on MCX, near record high.
As per a World Gold Council note published on 15 March 2024, gold traded around US$ 20/oz below the international price in the domestic market while in February 2024 a premium that ranged from US$0.25/oz to US$4/oz. One Ounce (oz) is equal to 28.349 grams while ₹83.18 currently corresponds to $1.
The high price of gold has likely impacted demand so much that the jewellers, who were probably carrying inventory bought before the surge, were compelled to sell below the corresponding international gold price. However, even at a discount, such jewellers could still make a profit while battling the downward slide of demand.
The World Gold Council states that India witnessed a substantial increase in gold imports, of 134%, on an annual basis in February 2024, at $6.1billion.
In volume terms, as per World Gold Council estimates, gold imports in India in February 2024 were likely over 90 tonnes, notably higher than the average 49 tonnes imported in the preceding three months, as well as a year ago. This rise may have been due to an anticipated increase in demand during the wedding season, along with bullion dealers and manufacturers front-loading inventories ahead of the general elections.
Based on the import data and historical insights, the World Gold Council anticipates that the Indian market will regain its demand for gold after the general elections. It is expected because the end of elections will not only be followed by another season of weddings but also there will be the unlocking of the demand that would have been pent-up from the onset of the polls.
Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.