Gold price fluctuations are leaving buyers and investors confused

The sharp volatility in gold prices has befuddled consumers and investors alike. While customers are still buying gold for weddings, casual buyers are holding off on purchases.

“The gold rate fluctuation is confusing customers, but at the same time, business is happening. Jewellery is not an essential item. While casual buyers or people who use it for investment are postponing their purchases, buying is still happening for weddings,” Asher O, Managing Director of India Operations at Malabar Gold & Diamonds, told BT on the sidelines of the retailer’s Rs 200 crore CSR initiative announcement for the financial year 2026–27.

Gold, viewed as a safe-haven asset, is currently trading at around $4,500 per ounce after surging to an all-time high of $5,600 per ounce in January.

While it is difficult to forecast prices of gold, Kirit Bhansali, Chairman of Gem and Jewellery Export Promotion Council (GJEPC), expects gold prices to stabilise around $4,000-4,500 levels. “It’s very difficult to forecast the price of gold. About 90% of experts used to say that during a war gold will touch $7,000 per ounce from $5,600 per ounce. However, gold prices fell from $5,700 an ounce to $4,200 as most central banks started investing in oil, selling gold.”

According to Bhansali, gold miners are making good money as the cost of mining gold is $1,600 per ounce, whereas the market price is hovering around $4,500.

Bhansali advises small- and middle-income investors to wait and watch. “In a volatile market, those who want to invest should invest less. You should not invest your entire capital only in one metal or commodity. If the war is over, then you will burn your fingers,” he cautions.

Malabar’s Asher, however, believes that gold prices will rise over the long term despite short-term fluctuations. “We believe every day is a good day to buy gold because over the long term it has always gone up. If you buy today, maybe after one week the gold prices come down, but one year down the line, it will mostly rise,” Asher says, adding that the long term Compound Annual Growth Rate (CAGR) of gold has always been high.

High Gold Prices Hit Demand

The ongoing war in West Asia has dented consumer sentiment for gold, according to the world’s fifth-largest retail jewellery group. “Many Indians live in West Asia. The sentiment is not right. Whatever is happening now is not a positive thing. The business will definitely get impacted,” says Asher.

To deal with the ongoing gold price volatility, Malabar Gold & Diamonds has introduced a range of budget-friendly jewellery collections. “This year, we have developed a lot of products that suit customers’ budgets. If somebody was buying 100 gm of jewellery. Because of the gold price hike, they may not be able to buy the same quantity. We have come out with various collections which are budget-friendly,” says Asher, adding that the gold retailer has started selling 18-carat gold jewellery in select markets like Uttar Pradesh and Bihar. “Earlier, India was only 22-carat market. In some markets like UP, Bihar we found that 18 carat is well accepted,” says Asher.

For Malabar Gold & Diamonds, which has an annual turnover of $7.36 billion, over a third of revenue comes from international markets. It operates a retail network of over 425 showrooms across 14 countries. After opening 40 stores during the ongoing financial year, Asher says the jewellery retailer plans to open 50 more new stores in the upcoming fiscal.

“If the war is over, then the sentiments will change. Gold prices will stabilize. In the last 3-4 days, people were buying gold thinking that it is going to go up because of war. But gold has come down mainly because investors are buying oil and the US dollar,” he says.

India imports about 800-1,000 tonnes of gold each year. About one-fourth of this comes from the West Asia. Owing to the recent price volatility, domestic gold demand has come down by 30% in the last three months, says Bhansali. “Because of the price volatility, gold buyers are confused about the right time to buy. With the ongoing war, I don’t see further correction,” he adds. Weddings account for around 60% of India’s gold jewellery demand.

In FY25, India surpassed China as the world’s leading consumer of gold jewellery, accounting for around 30% of the global demand, according to a report by Assocham and ICRA. In India, gold prices increased by 14% in FY24, 33% in FY25, and have already risen by 55% year-on-year in the first 10 months of FY26.

The pace of price growth in India has outstripped the increase in international gold prices in recent years, the report said. “In addition to the elevated gold prices in the international markets, the continuing depreciation of INR against the USD has further driven up gold prices in the domestic market,” it added.