Price Surge Trims Volume, Boosts Value

This Akshaya Tritiya, gold purchases saw a notable shift as prices surged nearly 60% year-over-year. The cost of 10 grams reached about ₹1,55,780. While higher prices led to an estimated 30% drop in the volume of gold sold, overall transaction value increased by 20-25%. This shows consumers' ability to adapt and gold's lasting appeal as a way to store wealth.

Price Jump Cuts Volume, Increases Revenue

Gold retailers experienced a sharp contrast between the amount of gold sold and the revenue generated. Jewelers reported a 30% fall in the quantity of gold sold, a direct result of the roughly 60% price increase from last year. However, total revenue climbed 20-25%, highlighting a major change in buying habits. Facing high prices, consumers leaned towards more affordable choices. About 40-50% of sales involved exchange deals for old gold, suggesting people traded in existing items rather than buying new ones outright. Younger buyers, in particular, focused on solitaires priced between ₹75,000 and ₹2.5 lakh, preferring specific high-value pieces over larger gold quantities.

Shoppers Adapt to High Prices

The Indian jewelry market showed resilience despite lower sales volume. Consumers actively adjusted by choosing lighter jewelry, small gold coins, and studded items that require less gold. This indicates a shift towards items that offer both style and practicality. Retailers like CaratLane and Kalyan Jewellers reported strong interest from buyers looking for design-focused pieces. PNG Jewellers also benefited from price stability in the ₹1.51-1.53 lakh range.

Geopolitical Fears Don't Drive Safe-Haven Demand

Geopolitical tensions in the Middle East did not drive gold demand as a safe haven this Akshaya Tritiya. Global gold prices have fallen approximately 13% in March. This happened because a strong U.S. dollar, rising Treasury yields, and profit-taking after previous rallies overshadowed safe-haven buying. Higher real yields made holding gold less attractive compared to other investments, and concerns about inflation led central banks to delay potential interest rate cuts. These broader economic factors limited gold's role as an immediate hedge against uncertainty.

Jewelry Market Growth and Valuations

India's jewelry market, worth an estimated USD 69.79 billion in 2025, is expected to reach USD 91.95 billion by 2032, growing at about 4.02% annually. Fine jewelry makes up 90% of this market, with most sales occurring through physical stores. Major companies like Kalyan Jewellers have a P/E ratio around 39-40. Titan Company, which owns CaratLane, has a P/E of roughly 83. PNG Jewellers trades at a P/E of 21-23, higher than the Indian Specialty Retail industry average of 18.9. These valuations suggest investors anticipate significant future growth from these companies.

Risks Emerge Amid High Valuations and Price Sensitivity

The current high gold prices pose an ongoing risk to sales volume. The strong reliance on trade-ins and the choice of lighter or studded jewelry suggest many shoppers are on tight budgets, valuing utility and price over buying large amounts of gold. While overall sales value remains strong, the drop in volume could lead to reduced demand if prices stay high. Additionally, high P/E ratios for companies like Titan (83x) and Kalyan Jewellers (40x) indicate optimistic market expectations. These valuations could be vulnerable if growth targets are missed or consumer spending weakens. Gold's limited safe-haven appeal during recent geopolitical events also questions its dependability as a crisis hedge for investors.

Outlook: Value Demand Expected to Hold

Analysts predict that gold demand will remain strong in terms of value. Investment purchases, such as coins, bars, and ETFs, are expected to be the main driver, although jewelry sales volume may stay low. The World Gold Council forecasts India's total gold demand to reach a five-year low in 2026, reflecting the ongoing impact of high prices on buying habits. Despite these challenges, gold's long-standing role in wealth creation and its deep cultural importance in India continue to support its value, ensuring ongoing consumer interest.