A Market in Shock
Gold has always been more than just a precious metal in India. It is culture, tradition, and emotional security wrapped into one. But now, the glitter seems to come with a sting. In recent months, prices of gold have skyrocketed to levels never seen before, shaking both households and big jewellery chains like Kalyan Jewellers.
Retail buyers are quietly stepping back, weddings are being re-planned with lighter ornaments, and jewellers are juggling loans and hedges to survive the storm. On the surface, revenues for brands like Kalyan are climbing, but once you look beneath, the picture isn’t as golden.
The Numbers Behind the Shine
Kalyan Jewellers has managed to report higher revenue, but this growth is being carried on the back of rising gold prices, not actual jewellery sales. Their volume growth, which was around 21% up to March 2024, has slipped to barely 1% in the months since.
That drop tells the real story. Families are still walking into showrooms, but many leave with smaller bags. Instead of four heavy bangles, they are buying two. Instead of a large bridal necklace, some are settling for lighter sets.
Why Customers Are Holding Back
For most Indians, gold is not just a luxury, it is an emotional need tied to festivals and weddings. But emotions have limits when budgets are stretched.
- Middle-class households are under strain. With food and fuel already expensive, a sudden jump in gold rates feels like one expense too many.
- Rural demand, traditionally a strong pillar of India’s gold market, has slowed even faster. Farmers and small traders, who usually invest savings in jewellery, are postponing purchases.
- Discretionary demand—non-essential jewellery bought for fashion or gifting—has been hit the hardest.
Yet, wedding jewellery continues to show some resilience. When it comes to marriage, families are reluctant to skip gold entirely, but they are scaling down to fit tighter budgets.
Kalyan’s Tightrope Walk
Kalyan Jewellers, one of the country’s largest retailers, is walking a fine line. On one side, high gold prices inflate revenue numbers. On the other, weak volume growth threatens long-term sustainability.
Their debt profile reveals another challenge. More than half of their borrowings—around 54%—are tied up in Gold Metal Loans (GMLs). This system allows jewellers to borrow gold directly instead of cash, repaying later in money at current prices. It eases cash flow but makes them vulnerable when gold prices rise sharply.
To cushion the blow, Kalyan has leaned on hedging strategies—financial instruments designed to offset price fluctuations. While these measures reduce some volatility, they cannot eliminate all risks. Hedging comes with costs and doesn’t always perfectly match real-world demand cycles.
Shifting Inventory and Consumer Focus
Kalyan and its rivals are rethinking their approach. Inventory now tilts more heavily toward wedding jewellery, as these pieces are relatively price-inelastic. Lighter designs are being promoted more aggressively, allowing buyers to walk away feeling satisfied without breaking the bank.
There’s also a regional balancing act. In the South, temple-style designs remain popular, while in the North, layered pieces dominate. Retailers are carefully tailoring supply to meet shifting regional preferences, hoping to squeeze out every sale.
Another trend gaining momentum is old-gold exchange. Instead of spending fresh money, buyers are recycling their existing jewellery to acquire new pieces. This helps retailers maintain some flow even when fresh demand weakens.
The Consumer’s Dilemma
For households, the current gold rally is a double-edged sword. On one hand, those who already own gold feel wealthier as its value climbs. On the other, new purchases feel painfully out of reach.
Shoppers are learning to be tactical:
- Waiting for festival discounts and reduced making charges.
- Opting for smaller items like rings and pendants instead of larger sets.
- Trading in old jewellery to minimise fresh outflow.
What the Future Holds
So, where does this road lead? Analysts believe gold will remain elevated as long as global uncertainties—rising inflation, unstable currencies, and geopolitical tensions—continue. For jewellers, this means volume growth could stay muted, even if revenue looks strong on paper.
If prices keep rising, more retailers may expand into lighter, contemporary jewellery lines to capture youth buyers who want design over weight. There’s also talk of promoting lower-carat jewellery as a more affordable alternative.
For consumers, the long-term choice may shift from “how much gold can I buy” to “how smartly can I buy.” Those who plan purchases carefully—exchanging old pieces, buying in dips, or opting for timeless designs—will come out ahead.
The Bottom Line
Gold in India still shines bright, but the way people wear it is changing. The surge in prices has turned this traditional safe-haven into a luxury that demands strategy, not just sentiment. Kalyan Jewellers, like the rest of the industry, is learning to adapt—but the real test lies in how well they can keep India’s love for gold alive when each gram feels heavier on the pocket than ever before.