National News

Retail Gold Sales Drop 25% Amid Rising Prices, Lightweight Jewelry in Demand

Published

2 years ago

March 20, 2025

A 4% rise in gold prices in March has led to a significant 25% decline in retail gold sales at jewelers and a 60% drop in Zaveri Bazaar. Indian families with upcoming weddings are feeling the pinch of higher gold prices, turning to lighter, lower-carat jewelry to meet bridal jewelry demands. Despite this, demand is expected to pick up during Akshay Tritiya in April, though lightweight jewelry remains the preferred choice.

Gold prices saw a near-4% increase in the first half of March, bringing down retail sales by 25% compared to the same period last year. Zaveri Bazaar, a hub where retail jewellers buy bullion and jewelry in bulk, saw a 60% drop in sales.

Senco Gold & Diamonds, Joy Alukkas, PNG Jewellers, Mamraj Musaddilal Jewellers, and senior executives from the India Bullion & Jewellers Association mentioned that Indian families, especially those with weddings planned for the upcoming season, are stressed by the escalating prices. As a result, they are opting for lightweight jewelry, as high prices make it difficult to stick to the traditional gold jewelry budgets.

Suvankar Sen, the chief of Senco Gold, shared that sales of small-ticket gold jewelry in the ₹30,000 – ₹40,000 price range have dried up. “The high prices are keeping customers away from spending on gold,” he said. On March 18, gold was priced at ₹88,256 per 10 gm in the physical market, with a 3% Goods and Services Tax (GST), pushing the cost to ₹90,903 per 10 gm.

“Those who have weddings in the family are buying lightweight jewellery as they cannot stretch the budget. Demand has dropped by 15% beginning from March and if this rally continues, the recovery in demand may not happen. The next big sales can only happen during Akshay Tritiya, which falls on April 30,” said the MD of Senco Gold & Diamond.

Despite the rise in prices, the demand has remained sluggish in South India too. “Compared to last March, demand is down by up to 25%. While the high price is a big factor in this demand drop, other things like board exams have slowed down demand as well,” said Baby George, CEO of Joy Alukkas.

Saurabh Gadgil, chairman of PNG Jewellers, also highlighted the shift in preferences. “People are buying lightweight jewellery, and many are exchanging old gold jewellery with new ones. The volumes are getting impacted but value-wise the jewellers are not facing any issue.”

Avinash Gupta, partner at Hyderabad-based Mamraj Musaddilal Jewellers, noted that while demand has softened, it hasn’t reached alarming levels. “Demand will bounce back in April due to weddings and Akshaya Tritiya, but definitely the preference will shift to lightweight and lower caratage jewellery.”

Related Topics:2025 GoldSales nationalnews Retail Gold

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National News

Will RBI Rate Hikes Make Gold Loans Costlier?

With Bullion rIces Sliding From Recent Peaks, Borrowers Face A Dual Squeeze: Potential Upward Adjustments On Floating Borrowing Costs and Lower Loan Amounts Against Pledged jJewellery.

Published

10 hours ago

September 23, 2026

JewelBuzz Spread The Buzz

Potential rate hikes by the Reserve Bank of India (RBI) could push borrowing costs higher across the financial system, but the transmission to gold loans will not be immediate or uniform across all lenders, analysts and industry executives said. With bullion prices sliding from recent peaks, borrowers face a dual squeeze: potential upward adjustments on floating borrowing costs and lower loan amounts against pledged jewellery.

Key Takeaways for Borrowers & Lenders

Non-Uniform Transmission: A repo rate hike does not guarantee a 1:1 surge in gold loan rates. Lenders pricing credit via non-bank finance company (NBFC) cost-of-funds channels may adjust rates on a different timeline compared to banks operating direct floating-rate transmission models.

Loan Structure Matters: Existing fixed-rate borrowers remain protected for their contract term, while floating-rate borrowers face higher interest costs upon contract reset dates.

Collateral & LTV Risk: A fall in gold prices reduces the value of pledged collateral relative to total debt. Lenders are required under RBI regulations to enforce a strict loan-to-value (LTV) ceiling of 75%, leaving borrowers vulnerable to margin calls or mandatory partial pay-downs if market prices breach regulatory margins.

Commercial banks experience a high and direct immediate impact from a central bank rate hike, as their benchmark-linked External Benchmark Lending Rates (EBLR) force floating borrowing costs to reset quickly.

In contrast, gold loan NBFCs face a moderate or delayed impact, with interest rate adjustments depending on their broader liability structure, wholesale borrowing costs, and competitive market positioning.

For fixed-rate contracts, a rate hike has no immediate impact, keeping borrowing costs steady until the specified term ends. Conversely, floating-rate contracts carry a high impact, with interest charges stepping upward automatically on the loan’s next periodic reset date.

Strategic Considerations

Borrowers considering a gold loan amidst rate uncertainty and volatile commodity prices should evaluate the following structural factors:

Calculate Servicing Capacity: Assess whether monthly cash outflows can accommodate potential interest rate resets on floating-rate agreements.

Review LTV Margins: Evaluate pledged jewellery value at current spot rates to maintain a safety cushion above the mandatory 75% LTV regulatory threshold, mitigating auction risk during sharp gold pullbacks.

Compare Fine Print: Look past headline interest rates to evaluate reset frequencies, processing charges, prepayment penalties, and default auction clauses across competing bank and NBFC offerings.