India's gold jewellery demand revives as prices stabilise; festive orders pick up: WGC

Kolkata: After a month-long slowdown triggered by seasonally weak demand, an inauspicious period and policy measures aimed at moderating gold consumption, India’s gold market is showing early signs of recovery, according to the World Gold Council (WGC).

Consumer buying has picked up in recent weeks, with the revival largely driven by jewellery purchases, even as overall demand remains below normal levels. In contrast, investment-led demand for gold bars and coins has weakened amid softer prices.

The recent correction in gold prices and relative stability in rates have encouraged consumers to return to jewellery stores. Retailers have also stepped up promotional initiatives, including discounts, exchange schemes and flexible payment options, to attract buyers.


The recovery has not been restricted to wedding-related purchases. Jewellery manufacturers are witnessing fresh order bookings from retailers preparing for the upcoming festive season beginning August, indicating improving sentiment ahead of a key demand period.

However, the softer price environment has reduced the appeal of gold bars and coins, which are typically preferred by investors during periods of rising prices as they seek to benefit from price appreciation.

Meanwhile, the trend of exchanging old gold jewellery for new purchases has strengthened further following the import duty hike in mid-May. Retailers have reported a 10-20% rise in exchange volumes, with some indicating that old gold exchanges now contribute as much as 70% of jewellery sales.

The growing preference for recycling existing gold holdings highlights the changing dynamics of India’s jewellery market, where consumers are increasingly leveraging accumulated household gold to fund new purchases rather than making entirely fresh investments.

The WGC noted that while demand conditions remain mixed, the combination of stable prices, festive season preparations and increased exchange activity could provide support to the jewellery segment in the coming months.

WGC report adds that the major listed jewellery retailers6 reported a strong April–June quarter despite an inauspicious period that typically tempers purchases. Revenue growth was broadly in the high 30–60% y/y range, supported by regional festivals, the summer wedding season and Akshay Tritiya7 during the early part of the quarter.

Demand was broad, with plain gold and studded jewellery registering double-digit sales growth. Retailers also reported growth both in customer additions and average ticket sizes.

Old gold exchange for new jewellery continued to rise on average accounting for somewhere between 43–55% of sales during the quarter, aided in part by promotional and marketing campaigns. These retailers continued with their store expansions, adding between 8 and 33 stores across the country during the quarter. The continued pace of store openings can be seen as reflecting industry confidence in the medium-term outlook for jewellery demand.

Indian gold ETFs recorded a rebound in June, in contrast to the global trend of outflows, as investors bought into the price dips. Net inflows during the month were INR34.4bn (US$356mn), the highest since February. Holdings increased by 2.2 tonne to 119 tonne, in line with WGC's estimates, while the cumulative AUM fell 8% m/m, reflecting the decline in gold prices during the month.

The price pullback appears to have been viewed as a buying opportunity by investors, with inflows remaining healthy in early July. During 1–10 July, net inflows are estimated at INR12.1bn (US$127mn). Investor participation also broadened, with 135k new folios (accounts) being added during the month, taking the total number of accounts to 12.5mn.

Digital gold purchases through the Unified Payment Interface (UPI) rebounded in June after moderation in the previous month. Both transaction value and estimated volumes reached a three-month high, pointing to renewed investor interest. Transaction value rose 4% m/m to INR25.5bn (US$269mn), while volumes are estimated to have increased 9% m/m to 1.7t. Purchases during the month were above the 17-month average of 1.4t and remained within the higher-transacting category of UPI, suggesting that demand in the digital gold segment continues to be resilient.

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