Gold demand in the first leg of the festive season, from Raksha Bandhan to Onam, fell 28% from a year earlier to 50 tonnes, according to the India Bullion & Jewellers Association (IBJA).
Jewellers attributed the drop — the steepest in three years, or since Covid, for this period — to a 49% year-on-year increase in the price of the yellow metal, which they said dampened consumer sentiment. While many stayed away from jewellery, those who did buy mostly preferred lower karatage and lightweight items, they said.
Gold was trading in the retail market at Rs 1,07,321 per 10 gm on Monday; including GST of 3%, a customer has to pay Rs 1,10,540. The price was Rs 74,500, including GST, last Onam. “High prices are denting demand. What is keeping the consumer away is the volatility in price. It is not stabilising,” said Surendra Mehta, national secretary, IBJA. Average grammage of light weight jewellery was 7-12 gm, which has now slipped to 7-10 gm because of the high price, he said.
Joy Alukkas, chairman of the eponymous retail jewellery firm, said sales volume fell 15% from a year earlier till Onam this season. Pricy gold, though, pushed sales value by 25-30%.
The first leg of the festive season sets the tone for demand during Navratri and Diwali, when gold sales typically peak, as well as the wedding season that follows. India is currently going through the Shraddh period (September 7-21), when consumers in the Hindi belt avoid high-value purchases. However, they often book gold to take delivery during Navratri and Diwali. That demand too has slowed down, said jewellers.
Lower-karatage jewellery witnessed better movement than last year, said Ramesh Kalyanaraman, executive director of Kalyan Jewellers. “With gold prices the way they are, the 18K range enables us to offer customers the same classic, heavy designs, in a more affordable and accessible format,” he said.
“We are seeing strong traction for these pieces in urban markets and across northern India.”
22K Demand Slumps
“In the South, the cultural preference continues to favour traditional 22K jewellery, often purchased in lighter weights (grammage) to fit budgets,” said Kalyanaraman of Kalyan Jewellers. Even 14- and 9-karat gold jewellery is showing strong acceptance among consumers. “In 14-karat, we are seeing heavier designs gaining momentum. Importantly, there is no hesitation among buyers in choosing 9-karat jewellery. Sales of lighter-weight jewellery grew nearly 2.5x compared to last year, clearly outpacing the growth of traditional karatages,” said Saumen Bhowmik, MD, Caratlane,.
While jewellery demand has fallen, investment demand for gold remains intact. Keyur Shah, chief executive, Muthoot Exim, which sells gold coins, said 2-5 gm coins and 5-10 gm jewellery see the strongest demand among its low- to mid-income clients. Compared to last year, the trend still holds, though customers at times shift to lower grammage if prices go up suddenly and they have to make the purchase because of their own time deadlines, he said.
Malabar Gold has, however, witnessed a 5% increase in volume demand and 27% growth in value in run-up to the main festive season, said chairman MP Ahammad. “With GST reforms likely to boost overall consumption and ease inflation, we expect consumer sentiment to become stronger during Navratri and Diwali,” he said. Meanwhile, jewellery makers are tweaking their manufacturing strategy based on the market demand.
Mangesh Chauhan, managing director of Sky Gold & Diamonds, said demand for 22-karat has declined by 10-15% over the past 18 months. “There has also been a marked rise in demand for 9-karat gold, not just from retail consumers but also from leading jewellery brands we manufacture for, including Titan Company which recently launched a 9-karat gold collection,” he said. “As for 14-karat gold, demand has remained neutral, as it continues to be primarily used in lab grown jewellery.”
