Walk through the lanes of Mumbai's Zaveri Bazaar, one of India's oldest jewellery markets, and one trend is impossible to miss. Small stores prominently advertise: "Old gold exchanged here." The scene is similar in Chennai's T Nagar, where customers are increasingly walking into stores to exchange old jewellery rather than make fresh purchases. Underscoring the shift, some major retailers say recycled gold is driving up to 75% of their sales as prices of the precious metal have surged by up to 70% over a year.
Indians are still buying gold jewellery, but they are changing how they buy it. As global prices ease and 'adhik maas', the lunar month traditionally seen inauspicious for weddings and gold purchases, draws to a close, recycled gold is increasingly driving jewellery sales, while investment demand for coins and bars remains subdued.
The trend became more pronounced after Prime Minister Narendra Modi urged citizens on 10 May to reduce gold purchases to help conserve foreign exchange reserves amid soaring prices linked to the West Asia conflict. Three days later, the government raised the effective import tax on gold and silver to 15%, reversing duty cuts announced two years earlier.
“Everything is running on recycled gold,” said Kumar Jain of Mumbai Jewellers Association. “Sale of coins and bars has completely stopped,” he added.
Jewellery showrooms remain busy, but exchange transactions are increasingly driving sales.
“At Jos Alukkas, exchange-led purchases now account for approximately 75% of our business, up from around 60% previously,” said Paul Alukkas, managing director of Jos Alukkas, a major south Indian retail chain.
Responding to the mood amid high prices and macro uncertainties, leading jewellery chains are aggressively promoting exchange schemes, offering 'zero deduction' on old gold and, in some cases, full value regardless of the caratage of the jewellery being exchanged.
An executive with direct knowledge of the matter at Senco Gold & Diamonds said consumers are increasingly monetizing existing holdings rather than making fresh purchases. “Around 50% of our sales are now coming through gold exchange,” said the executive.
Buying patterns
Customers are also taking more time in their purchase decisions. “At present, we are seeing customers spend more time evaluating purchases, but the conversion among serious buyers remains healthy,” said Supriya Kataria, founder of Maharashtra-based retailer Kumari Fine Jewellery.
Impulse purchases have fallen sharply. Jain of Mumbai Jewellers Association says discretionary buying fell at least 25% in May, with wedding-related purchases accounting for most of the demand.
Organized retailers are also seeing greater interest in lightweight and lower-carat jewellery, as consumers seek to keep budgets in check. Alukkas said the demand for lower-carat products is largely coming from price-sensitive buyers. Yet its adoption remains limited. The Senco executive mentioned earlier said 9-carat jewellery accounts for only 7-8% of its inventory and sales, while traders in Zaveri Bazaar said the demand is still concentrated in traditional 22-carat products.
Despite the trend of lower purchases for investment, many customers fear prices will continue to rise in the longer term.
In recent weeks, domestic prices have eased in line with the global markets, with 24-carat gold falling from ₹1,62,820 per 10 grams on 13 May to ₹1,52,890 on 15 June. However, analysts expect strong gains in the future. J.P. Morgan Global Research projects gold to average $6,000 per ounce by the last quarter of 2026, with prices potentially climbing to $6,300 in 2027 from around $4,200-$4,300 currently.
Coins lose sheen
Demand for coins and bars has weakened sharply since Modi's appeal related to the West Asia war crisis. A retailer at Zaveri Bazaar, who declined to be named, said more customers are exchanging gold coins for jewellery or cash.
“Investment demand had fallen when the duty was hiked,” said Surendra Mehta of India Bullion & Jewellers Association. He said people were hesitant to keep investing at such high prices.
“My aunt purchased gold at around ₹100,000. She could sell it for about 1,60,000 in just 5-6 months,” said Tanzim Farooqui, a customer at Umedmal Tilokchand Zaveri, in Mumbai. Farooqui said she has invested in gold coins for several years and redeems them when funds are needed.
According to World Gold Council's latest data, India's gold demand rose 10% year-on-year to 151 tonnes in the March quarter. However, in value terms as per government data, India’s gold imports fell by $2.21 billion to $3.42 billion in May 2026, down from $5.63 billion a month ago, but still 34% higher year-on-year. While values are high, volumes are expected to take a big hit.
“Looking at 2026 as a whole, we estimate that combined jewellery and bar and coin demand could decline by around 50-60t, around 10% lower than the previous year due to the impact of the import duty hike,” the World Gold Council said last month.
Volume and inventory pressure
The slowdown in volumes is expected to continue and increasingly affect organized retailers. “The Indian organized gold jewellery retail sector, comprising jewellery, coins and bars, is expected to see sales volume decline a further 13-15% on-year this fiscal, after an 8% contraction last fiscal, due to high prices of gold and recent policy measures to curb imports of the metal,” said analysts at Crisil Ratings in a note on 22 May.
Even a recovery in coin sales would not necessarily solve the industry's challenges. While it would boost gold sale volumes, it could hurt profitability as coins do not carry making charges, unlike jewellery, industry experts said.
Although listed retailers do not disclose sales volumes, management commentary suggests growing pressure on sales volumes. “Customer comes with a particular budget, wherein when the prices are low, the volume will be higher. When the prices are high, the volume will be lower,” said Ramesh Kalyanaraman, executive director of Kalyan Jewellers India Ltd in the quarterly analyst call in May. He noted that consumers have been unable to beat the 60-70% rise in gold prices over the past year.
Analysts also see an inventory build-up across the sector. “As of now, we think we are anticipating that there could be 30-40 days of incremental inventory or incremental stock that could be lying with these players,” said Rahul Guha, senior director at Crisil Ratings. Inventory turnover days measure the average number of days it takes a company to convert its stock into sales. Guha said that inventory turnover days have now moved to around 170-180 days from the typical 140-150 days.
Retailers are now pinning hopes on the upcoming wedding season, expected to peak in the third quarter, since such events still attract big jewellery purchases in the country. However, even this pick-up is seen measured.
“We anticipate a gradual normalization as opposed to an instant bounce-back,” Alukkas said.