Spot gold prices have fallen by ₹7,270 per 10 grams, or four per cent in the last eight trading sessions to ₹1,54,884 on Friday against ₹162,154 logged on August 26, due to sharp appreciation of the rupee against the dollar. The rupee has appreciated by 1 per cent to 94.49 on Friday against 95.35 on August 26, driven by $127 billion mop-up through FCNR deposit. As reported by The Hindu BusinessLine, when the rupee appreciates, the value of dollar-denominated gold depreciates, making the yellow metal cheaper for consumers in rupee terms. However, any sharp dip in gold makes consumers cut down on purchases in anticipation of further falls. Domestic silver prices have also dipped four per cent or ₹9,935 per kg to ₹2,35,456 on Friday from ₹2,45,391 logged on August 24, according to India Bullion and Jewellers Association data.
Indian jewellery buyers are increasingly adopting a budget-first approach when purchasing new gold jewellery, according to Khurana Jewellery House. As reported by CNBC TV18, Soumya Khurana noted a significant shift in customer conversations, with buyers now coming to stores with pre-decided budgets rather than asking about specific gold quantities. This represents a fundamental change from the traditional approach where customers would focus on purchasing a set weight of gold.
With gold prices at elevated levels, Indian households are increasingly bringing unused gold back into circulation through old-gold exchange programs. According to Khurana Jewellery House, this trend is driven by the large amount of gold that has remained unused in the economy. The exchange route is not only being used for new purchases but also for upgrading existing jewellery, with demand shifting towards newer and more modular designs. Jewellers are responding by offering lighter pieces and experimenting with different caratages, including 18-carat, 14-carat and even 9-carat jewellery.
The festive and wedding season is expected to drive stronger jewellery demand, with industry experts anticipating that the recent price correction could boost consumption. Prithviraj Kothari, President of India Bullion and Jewellers Association, noted that many consumers prefer to wait rather than buy gold during periods of uncertainty, leading to bunching of purchases around perceived dips. Rajesh Rokde, Chairman of All India Gem and Jewellery Domestic Council, said the fall in gold prices should help gold demand during the upcoming festive season, with the industry continuing to encourage responsible consumption, transparency and value creation. Aarav Bafna, Director of Akoirah by Augmont, added that volatile gold prices are making festive demand more selective rather than smaller in value, with deferred demand expected to return quickly during weddings and main festive buying days. Supriya Kataria, Founder of Kumari Fine Jewellery, said FCNR deposit flows can provide a favourable backdrop for jewellery consumption, particularly during the festive and wedding season.
