With gold prices posting their biggest annual gains in 46 years, consumers are increasingly turning to coins, bars and ETFs over traditional jewelry to avoid high costs. | Photo credit: PTI
“I like jewelery because it can be worn during events, but it is difficult to justify paying an extra 15% in fees,” says Kadam, who, like millions of Indians, sees buying gold during festivals as promising. “So this time I settled for a 10 gram coin,” she added.
Her decision reflects a broader shift in India, one of the world’s largest gold markets and where the metal has deep cultural and financial significance. With prices heading for the biggest annual increase in 46 years, consumers are increasingly turning away from jewelry in favor of small coins and bars.
Strong demand for safe-haven assets, US interest rate cuts and a weaker dollar have pushed global gold prices up 67% so far this year, reaching a record high of $4,549.7 per troy ounce on December 26.
India’s domestic gold price rose 77% this year, surpassing the Nifty 50 index’s 9.7% rise, helped by a 5% decline in the rupee against the dollar.
PRICE RISE REFORMS BUYING HABITS
Analysts say the trend captures a decline in overall demand and is likely to continue into 2026, following a global slowdown in ornament purchases as bullion prices soar.
For others, the adjustment means buying less gold rather than forgoing jewelry altogether.
Kolkata-based Nibedita Chakraborty said her household budget has not kept pace with rising prices, prompting her to switch to lightweight designs.
“Even reducing the weight of a gold chain by six or seven grams can save more than 100,000 rupees ($1,114),” Chakraborty said.
As prices rise, consumers are becoming more conscious about design and value, says Saurabh Gadgil, chairman of PN Gadgil Jewellers, which launched a new sub-brand for lightweight and lower carat jewelery in June.
“Buyers want pieces that allow them to participate in gold ownership without feeling price pressure, and modern craftsmanship has made lightweight jewelry aspirational rather than entry-level,” Gadgil said.
Total gold demand in India fell 14% year-on-year in the first nine months of 2025, with jewelery consumption falling 26% to 278 tonnes and investment rising 13% to 185 tonnes, the World Gold Council (WGC) said. Investments represented a record 40% of total demand during this period, underscoring gold’s continued role as a store of wealth in Indian households.
The shift towards investment gold and away from jewelery is expected to continue until 2026 as the metal continues to outperform other asset classes, said Prithviraj Kothari, chairman of the India Bullion and Jewelers Association (IBJA).
“Consumers are buying gold in the form of coins, bars or gold ETFs, assuming the rally will continue,” Kothari said.
India-listed gold-backed exchange traded funds (ETFs) saw inflows of $3.3 billion, equivalent to 28.7 tonnes so far this year, taking their holdings to 86.2 tonnes, according to the WGC.
Leading consultancy Metals Focus expects weakness in Indian jewelery demand to continue into 2026, with full-year jewelery consumption expected to fall by a further 9%. As gold becomes less affordable, jewelry consumption has seen a structural shift with consumers opting for lower carat and lighter weight designs, it added.
There is a growing acceptance of lower carat jewelry, including 18-carat and 14-carat options, especially among younger customers and working professionals, says Santosh Kataria, chairman, DP Abhushan Ltd.
“These pieces allow buyers to manage their budget while still enjoying attractive designs, making them suitable for everyday use,” said Kataria.
Published on December 31, 2025
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