Nearly 29 per cent of prospective buyers are considering informal gold channels, while jewellery consumption fell 20 per cent in Q3 despite a 16 per cent increase in value
Gold buying this Dhanteras is increasingly becoming a question of affordability rather than intent. With prices remaining significantly above last year’s levels, consumers are adjusting the quantity, purity and type of gold they purchase, while a growing section is also considering informal channels offering lower prices.
The recent correction in gold and silver prices has offered some relief to buyers waiting on the sidelines, but it has not fundamentally changed purchasing behaviour. Consumers continue to prioritise their budgets, opting for lighter jewellery, lower-carat products and smaller-ticket purchases rather than increasing their overall spending.
“Gold in India is never just a price trade. There is a strong emotional and cultural connection with buying gold on occasions like Dhanteras. The recent correction in gold and silver prices should therefore provide some comfort to consumers who were waiting on the sidelines,” said Sunil Katke, Head of Commodities Retail Business, Kotak Neo.
He added that while purchase intent remains intact, consumers are likely to opt for lighter-weight jewellery, lower-carat options and smaller-ticket purchases. Parag More, CEO of Emkay Wealth Management, said jewellery players were responding to elevated prices by expanding their lower-karat offerings, with 18-carat, 14-carat and 9-carat jewellery gaining attention among younger and price-conscious buyers.
Nearly 29 per cent of household consumers planning to purchase gold on November 6 intend to buy through informal channels offering cheaper rates, according to a LocalCircles survey covering more than 42,000 respondents across 312 districts. While 71 per cent said they would purchase gold from jewellers with proper bills, the findings point to the growing appeal of the grey market amid elevated domestic prices.
The shift comes at a time when India’s gold market is witnessing a divergence between value and volume growth. According to the World Gold Council (WGC), India’s gold jewellery consumption fell 20 per cent year-on-year to 99.9 tonnes in July–September 2026, even as its value increased 16 per cent to Rs 1.49 lakh crore.
Affordability Reshapes Dhanteras Purchases
The change in buying behaviour is also reflected in the growing preference for lightweight jewellery, smaller coins and lower-purity gold. Rather than abandoning the tradition, consumers are finding ways to participate without significantly increasing their festive budgets.
“Customers are protecting their budgets without skipping the ritual. Old-gold exchange has also surged, so many families are recycling old pieces into new designs rather than paying full price,” More said.
The WGC’s Q3 2026 data also reflects the pressure on physical demand. India’s jewellery consumption contracted 20 per cent year-on-year, while demand for gold bars and coins declined 40 per cent. The shift is changing the composition of jewellery purchases, with consumers increasingly looking at pieces that can be worn regularly rather than buying heavy jewellery primarily for weddings or special occasions.
Ankur Daga, Founder and CEO of Angara, said the market was witnessing a fixed-budget approach, with households maintaining their spending limits while purchasing fewer grams of gold.
He pointed to stronger demand in the sub-Rs 30,000 segment, driven by self-purchases and festive gifting, while purchases above Rs 1 lakh continue to find traction in weddings and milestone occasions. The middle price bands, however, are witnessing longer purchase decisions.
Daga added that consumers were exploring 14-carat and 18-carat gold, coloured gemstones and lab-grown diamonds to retain their design preferences without significantly increasing their budgets.
Grey Market Gains Attention Amid Import Duty Burden
The affordability challenge is also creating a wider concern for the organised gold trade. The LocalCircles survey found that 29 per cent of prospective buyers were considering informal channels offering lower prices, raising questions about the impact of higher import duties on consumer behaviour and the attractiveness of legally imported gold.
The government increased gold import duty from 6 per cent to 15 per cent in May 2026. Including GST, the total levy on imported gold is approximately 18.45 per cent, creating a price advantage for smuggled gold.
According to the WGC’s Q3 2026 Gold Demand Trends report, unofficial gold inflows into India increased more than 1,500 per cent to around 50 tonnes during July–September, compared with approximately three tonnes in the corresponding period last year. Meanwhile, official net gold imports declined 46 per cent to 114.1 tonnes.
The survey also examined consumer expectations from the government to address the issue. Around 37 per cent of respondents favoured a crackdown on gold smuggling networks, while 29 per cent wanted a review of import duties to discourage illegal imports. Another 17 per cent called for strict action against sellers of smuggled gold.
Overall, 66 per cent favoured stronger enforcement, either independently or alongside policy changes.
Jewellery Retailers Face Volume Pressure
The changing consumer landscape is reflected in the industry’s growth projections. According to Crisil Ratings, an analysis of 76 organised gold jewellery retailers, representing around 33 per cent of the industry’s revenue, estimates that jewellery volumes will decline 4–6 per cent in the current fiscal. This compares with an 8 per cent contraction in the previous fiscal, following a 56 per cent surge in gold prices.
However, revenue is expected to grow on the back of higher gold prices, which are projected to average 25–27 per cent above last fiscal’s levels.
“Demand indicators are pointing to stabilisation rather than a broad-based recovery,” said Himank Sharma, Director, Crisil Ratings.
He added that consumers were increasingly opting for lighter-weight and lower-carat jewellery to manage the impact of elevated prices.
The pressure is also extending to retailer profitability. Crisil expects operating margins to moderate by 60–80 basis points to 8.5–8.7 per cent this fiscal, compared with 9.3 per cent in the previous year. Lower gains from inventory appreciation, alongside higher promotional and customer engagement expenses, are expected to weigh on margins.
Retailers are also expected to moderate their expansion plans, with new store additions projected at 7–9 per cent of existing networks over the next two fiscals, against 12–15 per cent in the preceding two years.
Alternative Jewellery Gains Ground
The shift in spending is also benefiting categories beyond conventional gold jewellery. Amazon India reported that fashion jewellery shoppers increased more than 50 per cent year-on-year, while purchases of lab-grown diamond jewellery grew threefold during the festive period. Silver idols and figurines recorded nearly 2.7 times growth.
The trend towards alternatives is also being driven by consumers seeking greater design flexibility without committing larger sums to conventional diamond jewellery.
“Unlike gold and silver, diamonds are not traditionally purchased primarily for their investment value. With lab-grown diamonds, the conversation is increasingly centred on design, accessibility and personal choice. Consumers are discovering that they can own diamond jewellery without necessarily making the significant financial commitment traditionally associated with it,” said Disha Shah, Founder of DiAi Designs.
