Gold demand falls 16% after Diwali as record prices hit jewellery sales; what lies ahead

India’s gold demand fell 16% year-on-year in the third quarter of 2025, marking a sharp slowdown during what is typically the country’s busiest festive season. According to recent data, the fall was largely driven by record-high gold prices, which deterred consumers from making traditional jewellery purchases — a central feature of Indian celebrations and weddings.

With gold prices hovering near historic highs, many families chose to delay or scale back jewellery buying, impacting sales across both urban and rural markets. Retailers, who usually rely on festival-led spending, reported muted footfall despite offering discounts and lighter-weight designs. Smaller jewellers were hit hardest, while larger chains shifted focus to gold coins and investment-linked products.

Despite the weak jewellery demand, investment buying of gold surged 20% in the same quarter. Investors, wary of global market volatility and inflation risks, turned to gold as a safe-haven asset. The rising interest in gold bars, coins, and exchange-traded funds (ETFs) indicates a growing preference for liquid, secure, and wealth-preserving instruments over ornamental gold.

“Consumers are viewing gold not just as a symbol of tradition, but as a strategic part of their financial portfolios,” said a Mumbai-based bullion analyst. “The shift reflects increasing awareness of gold’s hedging value amid uncertainty.”

Experts note that this transition from decorative to digital and investment-led gold reflects a structural change in Indian consumer behaviour. Economic caution and high price sensitivity have driven buyers to prioritise financial prudence over cultural custom. Many financial advisors have also reported rising client interest in gold-backed investments, signalling a broader rethinking of household savings strategies.

Meanwhile, in the global markets, gold prices slipped on Friday (October 31) as the US dollar strengthened amid uncertainty over the pace of future Federal Reserve rate cuts. Spot gold fell 0.5% to $4,004 per ounce, while US gold futures for December delivery were steady at $4,016.70. Despite the decline, bullion remains on track for its third straight monthly gain, supported by expectations of monetary easing and geopolitical tensions.

In India, prices stayed elevated — ₹12,268 per gram for 24-karat gold, ₹11,245 for 22-karat, and ₹9,201 for 18-karat, according to the India Bullion & Jewellers Association (IBJA).

“Gold is in a minor correction phase, not a downtrend,” said Aksha Kamboj, Vice President, IBJA. “Buyers have turned price-sensitive after recent volatility, and we expect festive demand to return if prices stabilise.”

The US Federal Reserve’s recent rate cut — the second this year — brought the benchmark rate down to 3.75%–4.00%, but hawkish comments from Chair Jerome Powell have tempered expectations of another cut in December.

Jateen Trivedi, VP Research Analyst, LKP Securities, noted: “Gold remains supported by risk sentiment, trading around Rs 1,21,650 per 10 grams. Support lies near ₹1,18,000 and resistance around ₹1,24,000. Short-term direction will depend on upcoming trade discussions and Fed policy clarity.”

While the near-term outlook remains cautious, analysts believe India’s long-term gold demand will stay resilient, driven by cultural affinity and investment appetite. However, as 2025 shows, consumer behaviour is evolving — with investors increasingly treating gold less as adornment and more as insurance against uncertainty.