With gold prices up 54% since the 2025 festive season, Indian consumers are pivoting to affordable, diamond-studded ornaments. Retailers are adapting by using lower-carat gold bases to maintain sales in the budget-conscious luxury segment.
Record-high gold prices are reshaping the domestic jewellery market as consumers look for alternatives to traditional heavy gold ornaments. Over the past year, gold prices have surged 54% since the 2025 festive season, forcing a shift in household purchasing habits. Retailers across the country are witnessing a 20% surge in demand for diamond-studded jewellery, particularly in the entry-level luxury category where items are priced between Rs 10,000 and Rs 1 lakh.
The Shift to Lower-Carat Gold
To keep prices accessible, jewellers are changing the technical composition of their products. By utilizing lower-carat gold alloys—such as 18-carat, 14-carat, and even 9-carat bases—manufacturers are able to host smaller diamonds while keeping the final price tag within reach for budget-conscious buyers. This design adjustment allows retailers to offer pieces that provide a premium look and the shine of diamond jewellery, effectively mimicking the grandeur of traditional gold sets without the high cost of pure gold bullion.
Business Impact and Retailer Strategy
For jewellery retailers, this trend is a strategic necessity to maintain sales volumes in a high-cost environment. The shift toward contemporary items like pendants, bracelets, and earrings has allowed many shops to diversify their inventory beyond wedding-focused heavy necklaces. By offering lightweight alternatives, companies are capturing a wider customer base that prioritizes versatility and design over the actual weight of the gold.
However, this strategic shift comes with specific risks that investors in the retail sector may monitor. Balancing the cost of diamonds with lower-carat gold bases can place pressure on profit margins. Additionally, the inventory strategy requires careful management; if the consumer preference for these lightweight, diamond-heavy designs does not sustain momentum after the festive season, retailers could face a build-up of unsold stock.
Another point of caution is demand volatility. The current trend is heavily influenced by the sharp rise in gold prices. Should gold prices stabilize or retreat, consumer interest could potentially shift back toward traditional gold jewellery, affecting the sales trajectory of diamond-studded collections.
Moving forward, the primary metric for the sector will be the sustainability of these volume-driven sales through the remainder of the festive season. Market participants will track whether retailers can successfully manage their margins while sourcing quality diamonds to meet this changing consumer demand, and how competition intensifies as more players crowd the entry-level diamond luxury segment.