Whalesbook
Record Gold Prices Reshape Indian Buying Habits
India's gold market is undergoing a significant transformation. As gold prices soar to record levels, consumers are increasingly shifting their preferences from traditional jewellery to gold coins and bars. This trend is expected to persist, influenced by economic factors and cultural buying patterns during festivals.
The Price Surge Effect
Global gold prices have surged dramatically, heading for their biggest annual gain in 46 years. Domestically, Indian gold prices have climbed an impressive 77% this year. This steep rise makes jewellery, which carries an additional 15% in making charges, a less attractive option for many consumers seeking auspicious purchases.
Investment Outshines Ornamentation
Data from the World Gold Council highlights this divergence. In the first nine months of 2025, jewellery consumption saw a substantial 26% decrease, falling to 278 metric tons. In contrast, investment demand, encompassing coins and bars, grew by 13% to 185 tons. This marks a record 40% of total demand shifting towards investment forms of gold.
Adapting to New Realities
For consumers, the adjustment varies. Some, like homemaker Prachi Kadam, have completely switched to buying gold coins instead of necklaces or bangles to avoid making charges. Others, like Nibedita Chakraborty, are opting for lighter-weight jewellery designs. A reduction of just six or seven grams in a necklace can save over ₹100,000.
Industry Response and Future Outlook
Jewellers are responding by adapting their offerings. Saurabh Gadgil, chairman of P N Gadgil Jewellers, noted that modern craftsmanship allows lightweight jewellery to be aspirational. The company launched a sub-brand for lightweight and lower-carat jewellery. Industry bodies like the India Bullion and Jewellers Association (IBJA) anticipate this trend of purchasing gold coins, bars, and gold ETFs will continue into 2026, given gold's outperformance. Consultancy Metals Focus predicts a further 9% decline in jewellery consumption for the full year 2026, with consumers opting for lower caratage and lighter designs.
Expert Analysis
Santosh Kataria, chairman of DP Abhushan Ltd., observes a growing acceptance of 18-carat and 14-carat gold jewellery, particularly among younger customers and working professionals. These pieces offer appealing designs while allowing buyers to manage budgets effectively for everyday wear.
Impact
The shift towards investment gold and away from jewellery has significant implications for various stakeholders in the gold market. Traditional jewellery retailers may face pressure on sales volumes and margins, especially for intricate, high-value pieces. Conversely, entities dealing in bullion, gold coins, and gold-backed financial products such as gold ETFs are likely to see increased demand and business. This trend underscores gold's enduring role as a store of wealth in India, with consumers becoming more sophisticated in their approach to gold ownership, balancing cultural significance with financial prudence. The impact rating for this trend on the broader Indian market is considered moderately high, reflecting its influence on consumer behaviour and investment patterns within a key sector.
Impact Rating: 7/10