India’s ‘passion for gold’ fades as prices hover near record high

On a quiet afternoon at the Gold Palace jewellers in downtown Bengaluru, shopkeeper Shaik Ameen grumbles about lacklustre trading as Indian families cut back on pre-wedding purchases due to sky-high bullion prices.

Before gold hit fresh records, 29-year-old Ameen, who helps run the store with his father, said about half of the roughly 50 daily walk-in customers could be counted on for a sale. That level is now down to about one-quarter.

“People have stopped buying,” said Ameen. “A person who could afford to buy around 100 or 200 grammes has just shifted to like 50 to 60 grammes.”

Indian consumers’ love of gold is renowned: it is traditionally seen as a store of value for families, and has links to Lakshmi, the Hindu deity of wealth and prosperity.

But prices of the precious metal, which is widely viewed as a hedge against inflation, have advanced 24 per cent in rupee terms in the past 12 months, driven by conflicts in the Middle East and Ukraine as well as by huge bets by speculators in China, which has eclipsed India as the world’s biggest gold importer.

Despite its immense cultural importance in Hindu festivals and weddings, demand for gold jewellery in India fell 6 per cent last year, according to the World Gold Council, compared with the 10 per cent increase in China.

Sales volumes are expected to “stagnate” in the year to March 2025, according to Crisil, an Indian analytics firm owned by S&P Global.

Titan, a jewellery and fashion arm of Indian conglomerate Tata Sons, in May posted a fourth-quarter profit of Rs7.9bn ($95mn), below analyst estimates, after demand was hit by lofty bullion prices.

Despite India’s “passion for gold”, escalating costs will have an impact on families ahead of weddings, said Surendra Mehta, national secretary of the India Bullion and Jewellers Association.

“They have two options: either to buy lower quantities or to buy lower carats [purity],” he said. “I do not see prices getting corrected in the near future.”

While Indians are known to collect gold for weddings years in advance, with some saved over generations, last minute purchases are often unavoidable.

For Kishita Gupta’s marriage celebration hosted earlier this year at her home city of Meerut in north India, about a tenth of the event’s $95,000 budget was spent on jewellery, some bought two years earlier.

But when the 26-year-old marketing executive at planning platform WedMeGood looked to buy additional sets a month before her March ceremony, she baulked at the cost and instead opted for cheaper artificial jewellery.

Thanks to societal expectations, “parents are definitely under pressure because of the gold prices and it hampers a lot of decisions”, Gupta said.

There are many “mix and match things happening” and recycling of old jewellery for new items in response to gold’s “insane number”, added WedMeGood’s founder Mehak Sagar Shahani.

Rising costs across the wedding industry since the Covid pandemic means “whatever money you spend, it’s not getting you as far as what it did earlier, adding to that the gold prices are not helping,” said Vithika Agarwal, co-founder of upmarket Bengaluru-based Divya Vithika Wedding Planners.

But Agarwal said that has not stopped the rich from holding big bashes.

“When it’s my high-end clients it doesn’t make much difference,” she said. “There are some cultures . . . where the show factor is huge.”

The grandest display is set to be the July nuptials of Anant Ambani — the youngest son of Reliance Industries’ chair and Asia’s richest man, Mukesh Ambani — and Radhika Merchant.

The pre-wedding festivities, with lavish outfits, a performance from Rihanna and attendees including Mark Zuckerberg, were held around Reliance’s Jamnagar refinery complex in March and made headlines globally.

At the flagship Bengaluru store of the C Krishniah Chetty Group of Jewellers, a more than 150-year-old establishment with a history of well-heeled customers including the Maharaja of Mysore, sales associate Anil Karumbaya also scoffed at the idea his affluent customers had cut back.

He pointed out that Bengaluru, India’s Silicon Valley, was home to a number of billionaires and millionaires. During a tour of the store’s most prized collections, Karumbaya ushered the Financial Times away from a couple of “high-worth individuals” negotiating a purchase.

“The upper class and middle class come here, I don’t think they’ve been affected,” said Karumbaya. “They are not being deterred by the price.”

He added that many of the city’s residents are more wealthy than they first appear. “People have a lot of money. You have instances of people coming in with very simple footwear and walking away with a [$12,000] bill,” he said.