India’s Gold Jewellery Demand Slumps as Prices Surge, Middle-Class Buyers Pull Back

India’s organised gold jewellery retail sector was headed for one of its weakest volume years in a decade as soaring gold prices and higher import duties pushed consumers away from traditional jewellery buying.

According to a recent report by Crisil Ratings, organised gold jewellery sales volumes were expected to decline 13-15% this fiscal after already falling 8% last year.

The slowdown reflected a major shift in how Indians w ere approaching gold. What was once considered an essential household purchase, especially during weddings and festivals, was increasingly becoming unaffordable for many middle-class buyers.

Domestic gold prices surged nearly 55% last fiscal amid geopolitical uncertainty, rising global prices and a weakening rupee. At the same time, the government raised customs duty on gold to 15% from 6% in an attempt to curb imports and reduce pressure on the trade deficit.

The result was visible across jewellery stores. Consumers were shifting towards lightweight ornaments, lower-carat jewellery and studded designs instead of heavy traditional pieces. Many buyers were also postponing purchases altogether.

At the same time, gold was increasingly being treated as an investment product rather than a lifestyle or ceremonial purchase. Sales of jewellery had dropped nearly 25% over the past two fiscals, while demand for gold bars and coins surged more than 50%.

Despite weaker demand, jewellery retailers were still expected to report strong revenue growth because higher gold prices significantly boosted realisations. Revenues for organised retailers were projected to rise 20-25% this fiscal even as volumes declined.

Retailers were also expected to benefit from inventory gains as gold prices climbed further. However, part of those gains could be offset through aggressive discounts, promotional campaigns and the growing share of lower-margin gold bars and coins.

The high-price environment was also increasing operational pressure on retailers. Inventory holding periods were expected to rise to 160-180 days this fiscal compared to around 150 days last year. Debt levels across organised retailers were likely to increase as companies stocked more expensive inventory while continuing expansion plans.

Still, organised players continued expanding into Tier 2 and Tier 3 cities, largely through franchise-led models that required lower capital investment.

The bigger concern for the industry, however, was psychological. Gold in India had historically survived inflation, recessions and market volatility because it carried emotional and cultural value beyond price. But at current rates, affordability itself was becoming the biggest barrier.

For many households, gold was no longer just expensive — it was slowly turning aspirational.