India's festive gold demand faces a 10-12% volume drop after Prime Minister Modi urged consumers to buy only when necessary. Despite lower volumes, organised retailers expect higher revenue due to record prices and a shift toward old-gold exchange programs.
The Indian gold market is facing a challenging festive season as high prices and a government appeal for restraint reshape buying patterns. Following Prime Minister Narendra Modi’s September 1, 2026, appeal to purchase gold only when necessary, the India Bullion & Jewellers Association (IBJA) estimates that festive gold sales volumes could drop by 10-12% this year.
Gold prices have surged significantly over the past year, rising from approximately ₹11,100 per gram in September 2025 to nearly ₹15,500 per gram as of September 2026. This nearly 39% price increase has made traditional festive purchases more expensive, prompting consumers to reconsider their spending.
Retailers Pivot to New Strategies
While volume is expected to fall, listed jewellery retailers are relying on value-driven growth to protect their topline. Companies like Senco Gold & Diamonds are targeting revenue growth of over 25% for the current financial year. This growth is expected to come from price increases, store expansions, and a strategic shift in what customers buy. Retailers are actively promoting lighter jewellery, lower-carat pieces, and diamond-studded collections, which help customers manage their budgets even as the price of pure gold rises.
Another key trend is the rise of old-gold exchange programs. Many customers are now bringing their existing jewellery to exchange for new designs, rather than buying fresh metal. For some retailers, these exchanges have accounted for nearly half of their recent business. This trend allows consumers to acquire new items without paying the full cost of new gold, which helps maintain transaction frequency despite the record-high prices.
Organised vs Unorganised Market
Market experts expect a continued shift in market share from small, unorganised local jewellers to larger, organised national chains. CRISIL Ratings suggests that the market share of organised players could reach 50% by FY28, up from 38% in FY25. Larger brands have the advantage of broader customer networks, established trust, and the ability to run large-scale exchange schemes, which local players may struggle to match.
Risks to Monitor
Investors should be aware that the festive season involves more than just revenue growth. High gold prices introduce significant inventory management challenges and profit margin pressure for retailers. Additionally, persistent gold price volatility and ongoing global tensions can disrupt supply chains and consumer sentiment. While the government’s push to curb import-dependent consumption—including a 15% customs duty—continues to influence the sector, the primary monitorable remains whether retailers can maintain their profit margins as volume-driven growth slows down. Future updates on demand during major festivals like Navratri and the subsequent wedding season will provide a clearer picture of whether these strategic shifts are enough to offset the impact of the volume decline.