The gold price has risen by more than 65% since January. The retail price of the yellow metal stood at Rs 1,32,394 per 10 grams on Friday.“Despite higher prices, consumers continue to prefer 22-carat lightweight pure gold jewelery rather than switching to lower carat alternatives such as 18-carat, 14-carat and 9-carat, even as the government has introduced hallmarking facilities for these products,” said Sachin Jain, CEO, World Gold Council (WGC) India. “Indians will take time to transition to lower karat gold jewelry.”
Gold demand in the country continues to exhibit varying trends; the continued strength of investment demand is in stark contrast to the weakness in the jewelry segment. “Feedback from industry stakeholders, mainly manufacturers and retailers, indicates that despite the wedding season, gold jewelery volumes are lower on a year-on-year basis as higher prices and affordability weigh on consumption,” Jain said.
According to WGC data, total gold consumption in India between January and September was 462.4 tonnes.
Total gold imports this year amounted to $55 billion, an increase of 2% compared to the previous year. However, in volume terms, imports fell by around 20% to around 580 million tonnes, making the increase in value purely a factor of higher prices.
“While value growth remains positive on the back of higher prices, volumes – especially in the mid and small ticket segments, which support massive demand, remain under pressure,” Jain said.
Interestingly, high net worth individuals (HNIs) bought heavy gold pieces, weighing 100 to 400 grams each, lured by the continued price rise. However, the higher volume offtake by HNIs was insufficient to offset the broader volume weakness.Price volatility further limits purchases of discretionary and everyday jewelry. This difference is also visible in the retail landscape.
Large and mid-sized jewelers continue to post relatively healthy sales, supported by higher ticket prices and need-based wedding purchasing. However, small, independent jewelers are under pressure, according to Jain.
Meanwhile, demand for gold investment products, particularly bars and coins, remains strong.
The preference for investment-oriented purchases is reflected in the volume of gold imports, which rose sharply from 204 tonnes between January and June to 340 tonnes between July and October.
“We have seen first-time consumers buying gold coins as the continuous rise in prices has prompted them to enter the market,” Jain said.
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