Gold-Price-Surge Impact: Metal Glitter Masks Dip In Volumes As Buying Turns To Studded Jewellery

Gold's meteoric rise this year has added sparkle to the commodities market, but the shine has come with a twist for jewellers. The yellow metal hit a fresh record of Rs 1,22,169 per 10 grams on Thursday, marking an extraordinary 60.10% increase so far this year.

While this surge has boosted the value of sales, it has weighed on overall jewellery volumes, shifting consumer preferences and reshaping the festive season demand.

Industry data and company updates indicate that the second quarter has seen strong growth in the studded jewellery segment, even as plain gold jewellery volumes have remained subdued. The surge in gold prices has made heavy ornaments less affordable, prompting buyers to opt for lighter, more contemporary pieces. As a result, value growth has replaced volume expansion across the sector.

Titan Co.'s jewellery division reported a 19% growth in the domestic market during the quarter. The company said that the growth was driven by higher ticket sizes amid rising gold prices, which helped offset a marginal year-on-year decline in buyer count.

However, Titan’s flagship brands Tanishq, Mia and Zoya recorded mid-teen growth in studded jewellery, outpacing the performance of plain gold ornaments.

Suvankar Sen, chief executive officer of Senco Gold, said that gold prices are currently up 40% to 50% higher compared with the previous festive season, which has led to a shift in demand patterns.

"The focus will likely be on lightweight, studded jewellery as rising prices have become a concern," he told NDTV Profit, adding that diamond jewellery sales remained on a strong footing despite the broader market headwinds.

Meanwhile, Colin Shah, managing director of Kama Jewelry, noted that demand for lightweight 9-carat, 14-carat and 18-carat pieces is trending in the domestic market.

“Affordability and festive buying are driving the shift. The demand for heavy traditional jewellery has slowed temporarily but should recover as we enter the winter wedding season,” he said.

The changing product mix is expected to support margins in the coming quarters. The increasing share of studded jewellery, which carries higher realisations, will likely lead to margin expansion, although rising marketing costs may partly offset the gains.

Among listed players, Titan reported a 19% year-on-year rise in top line, outperforming expectations of 12% to 15% growth. Kalyan Jewellers recorded a 31% increase, though it marked its weakest growth in four quarters.

Senco Gold posted 6.5% growth, trailing its full-year guidance of 18% to 20%, while PN Gadgil saw an 8.6% increase, with revenue excluding its refinery operations which was up 31%.