Indian Gold Jewelry Demand Slumps Amid Surging Prices

Gems News: Festive Season Faces Unprecedented Challenge

India, one of the largest consumers of gold globally, is bracing for a steep decline in jewelry sales during the upcoming festive season. Rising bullion costs have pushed prices to historic highs, prompting many buyers to delay or downscale purchases. Market watchers forecast that demand could shrink by as much as 27% in volume terms during the three-week buying window, according to Surendra Mehta, national secretary of the India Bullion and Jewellers Association.

Indian gold jewelry sales face steep decline as record bullion prices drive buyers toward lighter and cheaper alternatives.
Image Credit: Stock Shots

Traditionally, gold jewelry plays a central role in weddings, cultural events, and seasonal investments. However, this Gems News report highlights that the buying season, which stretches from Navratri in September through Diwali in October, has collided with a dramatic price surge of nearly 50% compared to the same period last year. For many urban consumers, the increased costs have proven prohibitive, leading to postponed purchases or a switch to lighter ornaments.

Bullion Prices Hit Record Highs

Jewelry accounts for about 70% of India’s total bullion use, with festivals such as Dhanteras usually driving nationwide buying sprees. Gold outlets typically remain open until midnight to cater to customers. Yet this year, local prices are hovering above 100,000 rupees ($1,128) per 10 grams, a figure that has disrupted traditional buying habits. Many consumers, who generally budget for fixed spending levels, are now opting for minimalistic designs or ornaments weighing just a few grams.

Global markets are also reflecting this upward trajectory, with spot prices reaching an unprecedented $3,791.10 per ounce this week. This marks more than a twofold increase in just two years, amplifying the pressure on domestic buyers.

Shifting Consumer Trends

The World Gold Council reported in July that India’s jewelry consumption dropped 17% between April and June compared to the previous year, with overall demand projected to fall to its lowest level in five years by 2025. Jewelers across the country confirm this shift. Delhi-based jeweler Arham Ahmad noted that his customers are increasingly requesting affordable lightweight pieces, often weighing as little as two grams, instead of traditional heavy sets.

The festive season, once the lifeline of India’s bullion trade, now stands at risk of underperformance. While gold remains deeply embedded in Indian tradition and culture, the combination of record prices and shrinking affordability is reshaping consumer behavior in unprecedented ways. The coming months will be a crucial test for the jewelry industry as sellers struggle to balance tradition with new economic realities.

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