Gold demand dips as soaring prices hit jewellery sales

For the first time in a decade-with the exception of Covid-hit FY21-the two largest jewellery retail chains, Tata-owned Tanishq and Reliance Retail, saw a drop in money deposited by consumers for deferred gold jewellery purchase schemes in the last financial year. The squeeze is set to tighten given the inexorable rise in the yellow metal's price, leading to a drop in volumes purchased, said industry executives.

The net money deposited with parent Titan for gold jewellery purchase through Tanishq fell 19% to ₹3,458 crore from the year before, as per its FY25 annual report. Reliance Retail's annual report shows the retailer, which operates Reliance Jewels stores, have seen a 5% drop in money collected to ₹333 crore.

Ajoy Chawla, CEO of Tanishq said "As per Companies Act 1956, Deposit Regulation schemes which are covered under ‘Public deposit’ section in Annual Report only refers to Golden Harvest Scheme (GHS). Titan, however, also runs a parallel Rivaah Golden Advantage (RGA) programme which is not directly governed under Deposit Regulation. Both programmes have different offerings and purpose, hence public enrolments into the two need to be viewed together. While GHS deposits (gross) accepted during the year de-grew by 19%, overall GHS plus RGA grew by 14% approximately. RGA customer balance with the company as on 31st March 2025 was 239% higher than the previous year. RGA and GHS deposits together as on March-31 2025 were 10% higher than the previous year."


Industry executives said this reflects a significant drop in gold purchased. As prices have surged further this year, closing at ₹1.22 lakh per 10 gm on Friday, FY26 is also likely to see a drop in money through such programmes.

Purchases through this avenue have taken a hit by volume this year as well with gold prices having appreciated substantially, said Suvankar Sen, managing director of Senco Gold. There will be a value increase in the first half of FY26 due to the increase in prices, he said.

Gold prices rose 23% in calendar 2024. They're up 56% since the start of January from the year before, prompting the World Gold Council (WGC) to lower its full-year volume estimate for India by up to 200 tonnes. In calendar 2024, India consumed 802 tonnes of gold. The WGC pegs it at 600-700 tonnes in 2025.

Deferred purchase schemes are popular as they allow buyers to acquire gold through advance instalments with some offering discounts. Reliance had over 168,000 depositors as of mid-July. Nearly 40% of Senco's business comes from these schemes. Kalyan Jewellers sought shareholder approval in September to accept deposits for a similar programme. These schemes are governed by the Companies Act, 2013, and the Companies (Acceptance of Deposits) Rules, 2014.

Reliance Retail said in a September 30 notice that it intended to raise up to ₹500 crore this fiscal year through this scheme even though aggregate deposits held fell marginally in the April to mid-July period from the year earlier. Aggregate deposits held as of July 16 stood at ₹349 crore compared with ₹352 crore on March 31. This includes the amount that's unclaimed.

Bhargav Vaidya, a Mumbai-based gold trade analyst, said the monthly instalment scheme is losing sheen because of price volatility.

"Consumers have to deposit a fixed amount of money on a fixed date according to the rules of the scheme," he said. "Sometimes, it so happens that they may find it difficult to deposit the money on the fixed date and they default. This becomes rampant when prices are on a continuous rally. Also, they have no other choice but to take jewellery or gold coins against the money deposited."

Many are instead buying gold digitally through online platforms, which can be done at any time and for any amount giving them flexibility, he said.

"It is also not mandatory to make jewellery from the gold accumulated. Instead, they have the choice of selling the gold digitally and making money," Vaidya said.

Gold prices have crossed $4,000 per ounce internationally this year. Several factors such as economic and geopolitical uncertainty alongside the expectation of further interest rate cuts by the US Federal Reserve have driven gold prices up.

Robust central bank buying, heavy inflows into gold exchange-traded funds and a weak dollar have added to the momentum. Additionally, political turmoil in France and Japan has boosted demand for the safe haven.