India's 'gold craze' fades as prices hover near records

On a quiet afternoon at the Gold Palace jewellery store in downtown Bengaluru, shopkeeper Shaik Ameen complains of a lacklustre business as Indian families cut back on pre-wedding purchases due to skyrocketing bullion prices.

Before gold prices hit new records, Ameen, 29, who helps his father run the store, said about half of the 50 or so customers who come in each day could be counted as a sale. That level has now fallen to about a quarter.

“People have stopped buying,” Ameen said. “A person who could afford to buy about 100 or 200 grams has gone down to 50 or 60 grams.”

Indian consumers' love of gold is well known: it is traditionally seen as a store of value for families and is linked to Lakshmi, the Hindu deity of wealth and prosperity.

But prices of the precious metal, widely seen as a hedge against inflation, have risen 24% in rupee terms over the past 12 months, driven by conflicts in the Middle East and Ukraine as well as 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% last year, according to the World Gold Council, compared with a 10% increase in China.

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

Titan, a jewelry and fashion arm of Indian conglomerate Tata Sons, posted fourth-quarter profit of 7.9 billion rupees ($95 million) in May, below analysts' estimates, after demand was hit by high bullion prices.

Despite India's “passion for gold”, rising costs will impact families as weddings approach, said Surendra Mehta, national secretary of the Indian Bullion and Jewellers Association.

“They have two options: either buy smaller quantities or buy fewer carats. [purity]”I don't see a price correction in the near future,” he said.

Although Indians are known to collect gold for weddings years in advance, with some of it being kept for generations, last-minute purchases are often unavoidable.

For Kishita Gupta's wedding celebration earlier this year in her hometown of Meerut in northern India, about a tenth of the event's $95,000 budget was spent on jewelry, some purchased two years earlier.

But when the 26-year-old marketing manager for planning platform WedMeGood looked to purchase additional sets a month before her March ceremony, she balked at the cost and opted for less expensive faux jewelry instead.

Due to societal expectations, “parents are definitely under pressure due to the price of gold and that is hampering a lot of decisions,” Gupta said.

There are a lot of “combinations of things happening” and recycling old jewelry into new items in response to the “insane number of gold,” added WedMeGood founder Mehak Sagar Shahani.

The rising costs in the wedding industry since the Covid pandemic means that “whatever money you spend, it doesn’t take you as far as it used to, and gold prices aren’t helping,” said Vithika Agarwal, co-founder of Divya Vithika Wedding Planners, a premium wedding planner based in Bengaluru.

But Agarwal said that hasn't stopped the wealthy from throwing big parties.

“When it comes to my high-end clients, it doesn’t make much difference,” she said. “In some cultures… the spectacle factor is everything.”

The biggest event will be the wedding in July of Anant Ambani — the youngest son of Reliance Industries chairman and Asia's richest man, Mukesh Ambani — and Radhika Merchant.

The pre-wedding festivities, featuring lavish outfits, a performance by Rihanna and attendees including Mark Zuckerberg, took place around Reliance's Jamnagar refinery complex in March and made headlines around the world.

At the Bengaluru flagship store of the C Krishniah Chetty jewellery group, a more than 150-year-old establishment with a history of well-heeled customers including the Maharaja of Mysore, salesman Anil Karumbaya also scoffed at the idea that his well-heeled customers had cut back on spending.

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 sought-after collections, Karumbaya pulled the Financial Times away from a few “high net worth individuals” negotiating a purchase.

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

He added that many of the city's residents are wealthier than they appear at first glance. “People have a lot of money. There are cases where people come in with very simple shoes and leave with a [$12,000] “bill,” he said.