Festive Season Dampened for India’s Gold Industry Amid Soaring Prices

India, the world’s second-largest consumer of gold after China, has seen a notable shift in buying habits. Traditionally, gold purchases are linked to cultural and religious festivals, but rising prices have altered consumer behavior. “People are spreading out their purchases throughout the year rather than waiting for festival-specific discounts or sales,” Kothari explained.

This year, the steep rise in prices—up over 25% since last year—has further pressured consumers’ spending power. Amit Modak, CEO of PN Gadgil and Sons, a Pune-based jeweller, noted that buyers are increasingly opting for lighter, more affordable jewelry pieces to stay within their budgets. “We’re seeing more interest in minimalist designs, which allow people to buy gold but at a lower weight and cost,” Modak said.

India’s gold imports soared by 216% in August compared to the previous month, reaching 136 metric tons as jewellers anticipated strong festive demand. But as prices climbed, the momentum stalled. Dealers estimate that imports in September dropped to just 60 tons, less than half the previous month’s total.

This decline in demand comes against a backdrop of global economic uncertainty and fluctuating market dynamics. Gold, traditionally seen as a safe-haven asset, has been supported by global investors as inflation concerns and geopolitical tensions drive interest in hard assets. Central banks have also increased their gold reserves in recent years, further tightening supply.

The interplay between India’s domestic market and global trends is crucial. Rising prices, driven partly by international factors, are reshaping local demand patterns, even as the government’s policies aim to make gold more accessible.