For millions of Indians, buying gold during festivals is a sacred tradition. But in 2025, as prices soared to historic highs, this age-old custom is undergoing a dramatic transformation. Consumers across the nation are pivoting from ornate jewellery to more pragmatic forms of the precious metal, such as coins and bars, fundamentally reshaping one of the world's largest gold markets.
The Price Surge Reshapes Consumer Habits
Global gold prices have surged by an impressive 67% so far this year, driven by strong safe-haven demand, expectations of U.S. interest rate cuts, and a weaker dollar. The rally peaked on December 26, with prices hitting an all-time high of $4,549.7 per troy ounce. In India, the impact was even more pronounced. Domestic gold prices climbed a staggering 77% in 2025, significantly outpacing the Nifty 50 index's 9.7% gain, partly due to a 5% depreciation of the rupee against the dollar.
This unprecedented price rise has forced a rethink for buyers like Prachi Kadam, a Mumbai homemaker. After nearly two decades of purchasing gold jewellery every festive season, she opted for a 10-gram gold coin this year. "I like jewellery because it can be worn during functions, but it's hard to justify paying an additional 15% in making charges," Kadam explained, highlighting a key concern for cost-conscious consumers.
From Ornaments to Assets: A Structural Shift
The data confirms this is a nationwide trend. According to the World Gold Council (WGC), India's total gold demand fell by 14% year-on-year in the first nine months of 2025. Within this, a stark divergence emerged: jewellery consumption plummeted by 26% to 278 metric tons, while investment demand for coins and bars rose by 13% to 185 tons. Remarkably, investment made up a record 40% of total demand during this period, underscoring gold's enduring role as a store of wealth.
Prithviraj Kothari, President of the India Bullion and Jewellers Association (IBJA), expects this shift to persist through 2026, as gold continues to outperform other asset classes. "Consumers are purchasing gold in the form of coins, bars, or gold ETFs, assuming that the rally will continue," Kothari stated. This sentiment is reflected in the inflows of $3.3 billion (28.7 tons) into India-listed gold-backed exchange-traded funds (ETFs) this year, raising total holdings to 86.2 tons.
Adapting to the New Normal: Lightweight and Low-Carat Designs
For those not ready to abandon jewellery entirely, the adjustment means buying smarter. Consumers like Kolkata-based Nibedita Chakraborty are turning to lightweight designs to manage budgets. "Even reducing the weight of a gold necklace by six or seven grams can save more than 100,000 rupees ($1,114)," Chakraborty noted.
The industry is rapidly adapting to this new demand. Saurabh Gadgil, Chairman of P N Gadgil Jewellers, observed that buyers are now more design- and value-conscious. His company launched a new sub-brand in June focused on lightweight and lower-carat jewellery. "Buyers want pieces that allow them to participate in gold ownership without feeling price pressure," Gadgil said, adding that modern craftsmanship has made lightweight jewellery aspirational.
There is a growing acceptance of 18-carat and 14-carat jewellery, especially among younger customers and working professionals, noted Santosh Kataria, Chairman of DP Abhushan Ltd. "These pieces allow buyers to manage budgets while still enjoying appealing designs, making them suitable for everyday wear," Kataria explained.
Looking ahead, consultancy Metals Focus projects the softness in India's jewellery demand to continue into 2026, with full-year consumption expected to decline by a further 9%. The era of record prices has not diminished India's cultural affinity for gold but has undoubtedly reinvented how the nation buys and values its favourite metal.
