Gold crosses Rs.1.04 Lakh: Festive season drives strong jewellery demand despite record prices

Jewellery Industry Responds with Attractive Festive Offers

Major jewellery retailers are countering high gold prices with unprecedented discount schemes to maintain consumer interest during the crucial October-December festive period. Kalyan Jewellers leads with aggressive pricing strategies, offering 50% discount on making charges for wedding jewellery, 40% off on antique collections, and 30% flat discount on premium gold ornaments. The company has also launched advance booking schemes for Dhanteras to secure customer commitments.

Tanishq provides substantial relief with discounts up to Rs.450 per gram on making charges and 35% off on diamond jewellery, alongside their signature no-deduction policy on old gold exchanges. Meanwhile, CaratLane entices customers with free gold coins ranging from 0.5 grams to 4-5 grams based on purchase values, with qualifying amounts starting at Rs.30,000.

Aditya Birla Group's Indriya brand reports growing preference for lighter, lower-carat jewellery, offering up to 35% discount on making charges and innovative rate protection plans that allow customers to lock in prices on booking day. This strategy directly addresses consumer concerns about further price escalations.

Market Dynamics Show Strategic Consumer Adaptation

The World Gold Council data reveals fascinating market dynamics, with India's gold consumption in Q2 2025 falling 10% to 134.9 tonnes compared to the previous year. However, jewellery demand declined more sharply at 17%, while investment demand actually increased by 7%, indicating a strategic shift in consumer behavior.

Investment demand has surged dramatically, with gold ETFs witnessing monthly inflows of Rs.20.81 billion in June 2025, representing a ten-fold increase month-on-month. This shift reflects growing investor sophistication, as consumers increasingly view gold as a financial asset rather than merely decorative jewellery.

Consumer Strategies and Lower-Carat Innovation

Faced with unprecedented prices, consumers are adopting innovative purchasing strategies. Exchange transactions have become increasingly popular, with industry executives reporting "robust exchange activity" as customers trade old jewellery for modern designer pieces. Jewellers expect old gold exchange rates to surge to 45% this festive season compared to 20-25% last year.

The industry has responded by introducing lower-carat alternatives to maintain accessibility. Senco Gold & Diamonds has launched 9-carat jewellery in collaboration with Sky Gold & Diamonds, specifically targeting younger consumers. Kalyan Jewellers reports growing interest in 18-carat traditional pieces, while multiple brands now offer hallmarked 9-carat and 14-carat designer collections.

Price Performance and Investment Appeal

Gold's exceptional performance continues to outpace traditional investments, with one-year returns significantly exceeding three-year stock market gains. The Nifty 50 delivered 24% returns from Diwali 2023 to 2024, while gold sovereign achieved 41% returns during the same period. Silver has been even more spectacular, generating 37% year-to-date returns.

This strong performance, combined with global factors including a weaker US dollar, elevated geopolitical tensions, and strong ETF inflows, continues driving institutional and retail investment interest. Central banks now hold more gold than US Treasuries for the first time in three decades, providing fundamental support for prices.

Outlook for Peak Festive Season

Industry analysts expect gold demand to strengthen during the peak October-December festive period, supported by sustained investment interest and wedding-related purchases. The combination of tax cuts, innovative financing schemes, and aggressive retailer discounts may boost consumption despite elevated prices.

However, experts caution that any renewed price surge could curb overall demand, with the World Gold Council projecting 2025 consumption between 600-700 tonnes, potentially marking a five-year low. The market's resilience will ultimately depend on the industry's continued ability to innovate around pricing challenges while maintaining the cultural significance of gold in Indian society.

With gold imports hitting a nine-month high in August 2025 ahead of the festive season, the industry appears optimistic about demand revival despite record pricing pressures.