Gold's Glitter Fades For Indian Households As High Prices Dull Jewellery Demand

Zakiya Shaikh, a Mumbai homemaker, has always seen gold as her family's financial safety net. Every festival and milestone, she would save up to buy a small gold ornament--sometimes a ring, sometimes a chain. But this year, as she stands outside the shops of Zaveri Bazaar, Mumbai's iconic jewelry hub, Zakiya is empty-handed.

"I wanted to buy a chain for my daughter's wedding, but the price is just too high. I never thought gold could ever become this expensive," she said with disappointment.

Zakiya's story is echoed across India as gold prices hover near record highs, recently touching Rs 1 lakh per 10 grams led by rising geopolitical tensions and economic uncertainty.

For families with fixed budgets, this rise has led them rethink. "Our budget for jewellery has not changed, but the price of gold has shot up. We simply cannot afford what we could last year," another consumer, Surti, said.

The impact is visible on the ground. Zaveri Bazaar, usually bustling with shoppers ahead of wedding season is now witnessing empty aisles and worried traders as jewelry, which makes up nearly 70% of India's gold demand, has taken the biggest hit.

This has led several buyers to postpone their purchases or start opting for lighter and less expensive jewellery pieces.

"There is subdued demand for retail gold jewelry across pan India, down by 30-40% on year and footfalls lower by 15% on year," Anil R. Jain, wholesaler for gold jewellery at R Pukhraj & Co said.

As prices soar, more Indians are recycling old gold, selling family heirlooms or exchanging outdated ornaments to take advantage of the rise in prices, giving boost to the gold recycling business. 

"Recycling of gold is also seeing a high percentage, earlier this year it was 25% on year but now it has risen to about 60-70% on year as customers are not coming out with cash," Jain said.

In February, the World Gold Council told Reuters that India's gold consumption in 2025 is set to cool to between 700 and 800 metric tonnes, a drop from 802.2, which was the highest since 2015.

While jewelry sales suffer, investment demand for gold is rising, with many shifting towards gold exchange-traded funds, digital gold, and coins, hoping to hedge against inflation and market volatility, analysts said.

On Friday, gold August futures traded on the commodity exchange platform ended nearly 2% lower to $3286.1 after US President Donald Trump said that US and China had signed a trade agreement and on easing tensions between Iran and Israel.

However, analysts expect prices to rise after some correction. If global tensions persist and central banks keep buying gold, prices could climb even higher, possibly touching $3,800 an ounce in the near term. This translates in well above Rs 1.08 lakh per 10 grams in India, Surendra Mehta, National Secretary at India Bullion and Jewellers Association Ltd said.

Even if the geopolitical tensions ease, concerns around tariffs and central bank actions could keep gold out of reach for many consumers.

For Zakiya and countless others, the question now is not just when gold prices will cool off, but whether the yellow metal will ever return to being the accessible symbol of security it once was.