“I like jewellery because it can be worn during functions, but it’s hard to justify paying an additional 15% in making charges,” said Kadam, who, like millions of Indians, considers buying gold during festivals to be auspicious.
“So I settled for a 10-gram coin this time,” she added.
Her decision reflects a broader shift in India, one of the world’s largest gold markets and where the metal holds deep cultural and financial significance.
With prices heading for their biggest annual gain in 46 years, consumers are increasingly turning away from jewellery toward small coins and bars.
Strong demand for safe-haven assets, US interest rate cuts and a weaker dollar drove global gold prices up 67% so far this year and saw them hitting a record high of US$4,549.7 per troy ounce on Dec 26.
Indian domestic gold prices climbed 77% this year, outpacing the Nifty 50 index’s 9.7% gain, aided by a 5% fall in the rupee against the dollar.
Price surge reshapes buying habits
Analysts say the trend is cushioning a drop in overall demand and is likely to persist into 2026, echoing a global slowdown in ornament purchases as bullion prices soar.
For others, the adjustment means buying less gold rather than abandoning jewellery 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 necklace by six or seven grams can save more than ₹100,000 (US$1,114),” Chakraborty said.
As prices rise, consumers are becoming more design- and value-conscious, said Saurabh Gadgil, chairman of PN Gadgil Jewellers, which launched a new sub-brand for lightweight and lower-carat jewellery in June.
“Buyers want pieces that allow them to participate in gold ownership without feeling price pressure, and modern craftsmanship has made lightweight jewellery aspirational rather than entry-level,” Gadgil said.
India’s total gold demand fell 14% year on year in the first nine months of 2025, with jewellery consumption down 26% to 278 metric tonnes and investment up 13% to 185 tonnes, the World Gold Council (WGC) said.
Investment made up a record 40% of total demand during the period, underscoring gold’s enduring role as a store of wealth in Indian households.
The shift toward investment gold and away from jewellery is expected to persist through 2026, as the metal continues to outperform other asset classes, Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA), said.
“Consumers are purchasing gold in the form of coins, bars, or gold ETFs, assuming that the rally will continue,” Kothari said.
India-listed gold-backed exchange-traded funds (ETFs) saw an inflow of US$3.3 billion, equivalent to 28.7 tonnes, so far this year, which raised their holdings to 86.2 tonnes, according to the WGC.
Leading industry consultancy Metals Focus expects the softness in India’s jewellery demand to carry into 2026, with full-year jewellery consumption projected to decline by a further 9%.
With gold becoming less affordable, jewellery consumption has seen a structural shift where consumers are opting for lower caratage and lighter-weight designs, it added.
There is growing acceptance of lower-carat jewellery, including 18-carat and 14-carat options, particularly among younger customers and working professionals, said Santosh Kataria, chairman of DP Abhushan Ltd.
“These pieces allow buyers to manage budgets while still enjoying appealing designs, making them suitable for everyday wear,” Kataria said.