Record-high prices of gold are weighing down on gold jewellery demand in India, with consumers limiting their purchases to occasion-based jewellery pieces, revealed the World Gold Council (WGC).

Gold jewellery purchases are now restricted to items needed for events, primarily weddings, said WGC Research Head for India Kavita Chacko in her latest research paper.

"In addition, financial year-end dynamics such as statutory payments and tax-saving investments are curtailing discretionary spending and further weighing on demand," she noted. "This slowdown is broad-based across both urban and rural areas."

Gold prices have breached the US$3,000 per ounce mark in March, reaching US$3,025.20/oz as of March 25, 2025 and representing a 38.78 per cent year-on-year increase from US$2,179.80/oz around the same period last year.

Citing anecdotal reports, Chacko said consumers are waiting on the sidelines and hoping for a price correction or signs of price stability. 

"Despite this, notwithstanding an easing in momentum, investment demand for bars and coins remains relatively healthy, driven by bullish sentiment regarding the future trajectory of the gold price," she added.

Old jewellery

Meanwhile, soaring gold prices are prompting sales of "old gold jewellery." Chacko stated that retailers had reported a significant uptick in scrap or old gold sales, with some attributing up to a third of their sales to the exchange of old jewellery for newer, lighter pieces.

Loans against gold jewellery have likewise increased, she added. "To the end of January this year, retail gold loans by commercial banks were up 77 per cent year on year, indicating that consumers are increasingly leveraging gold for liquidity and financial gain," noted the WGC official.