The gold price in India has witnessed a notable shift in May 2025, marking a 7% decline from its historic peak of Rs 1 lakh per 10 grams reached on April 22. This fall in gold prices has brought relief to consumers and revived demand, especially for jewellery purchases ahead of the wedding season. The correction follows global market cues, including eased US-China trade tensions, and a general improvement in geopolitical situations.

In the international market, the price of gold experienced its sharpest weekly fall since November 2024, dipping by more than 4% to Rs 2,72,011 (US$ 3,180) per troy ounce on May 16, compared to the all-time high of Rs 2,99,384 (US$ 3,500) on April 22. The US and China agreeing to lower tariffs for a 90-day period appears to be the key reason behind the drop in international gold prices.

In India, this gold price drop has led to a surge in footfalls at jewellery stores, with increased interest in affordable 18-carat plain gold jewellery. Traditionally, 22-carat gold has dominated the wedding jewellery market, but economic factors and rising gold prices—up almost 24% since January 2025—are pushing both jewellers and consumers to explore lower carat options.

A key trend emerging from this shift is the increased adoption of 18-carat gold for wedding purchases. As the wedding season peaks in June, followed by another spike in November and December, many buyers are placing advance orders, anticipating a potential price surge in the second half of the year, particularly if President Donald Trump imposes reciprocal tariffs once the 90-day window ends.

Interestingly, jewellers report a notable rise in demand from tier-II and tier-III cities, where value-conscious consumers are showing greater interest in 18-carat and even 14-carat jewellery. Previously, 14-carat and 18-carat gold were mostly reserved for studded jewellery, but now the demand has expanded into plain designs as well. This change reflects a broader shift in consumer behaviour, where aesthetic appeal and affordability are outweighing the traditional preference for higher purity.

Recognising this trend, jewellers like Kalyan Jewellers have begun offering 18-carat jewellery in selected markets, although states like Tamil Nadu continue to prefer the conventional 22-carat gold. This regional diversity in preference is prompting jewellers to diversify their offerings, balancing traditional tastes with modern pricing needs.

To support this change, the India Bullion & Jewellers Association (IBJA) has approached the Bureau of Indian Standards (BIS) to introduce hallmarking with Hallmark Unique Identification (HUID) numbers for 9-carat jewellery. This would allow greater transparency and trust for consumers exploring even lower carat gold options.

After the Akshaya Tritiya festival, the gold market experienced a lull due to persistently high prices. However, the recent correction has revived interest among buyers, especially those looking to make purchases for upcoming weddings. Jewellers confirm that walk-ins and inquiries have increased significantly over the past week, with many opting for budget-friendly yet elegant options.

In fact, the gold buying sentiment in India is closely tied to social and geopolitical developments. With India-Pakistan tensions easing and Russia and Ukraine resuming talks, global uncertainties have reduced, easing pressure on safe-haven investments like gold. Additionally, domestic buying cycles, especially surrounding festivals and wedding seasons, strongly influence jewellery demand patterns.

From a macroeconomic perspective, gold remains a critical asset class in Indian households. The recent dip in prices may not mark a long-term downtrend but is enough to trigger consumer action in the short term. Industry experts believe that unless another major geopolitical conflict emerges, gold prices may stabilise, offering a buying opportunity for those who held off earlier due to high rates.

Jewellery retailers are also innovating to stay ahead of this trend. Many are now offering exchange schemes, discounts on making charges, and promotional offers to encourage conversions. The shift towards 18-carat jewellery is also helping jewellers expand their customer base, especially among younger buyers and middle-income families.

Consumers, on the other hand, are becoming more informed and cautious. With gold prices still significantly higher than a year ago, many are dividing purchases into phases—opting for lighter pieces now and heavier jewellery later, depending on how the market moves.

Meanwhile, regulatory measures like BIS hallmarking continue to evolve. The introduction of HUID for 9-carat jewellery, if approved, will bring greater assurance to buyers, especially as jewellers diversify purity levels. With India being one of the largest consumers of gold globally, this move could also influence global hallmarking norms.

In conclusion, the current 7% drop in gold prices from the April 2025 peak of Rs 1 lakh per 10 grams has served as a key catalyst for the revival of jewellery demand across India. Consumers are actively making the most of this dip, with 18-carat jewellery gaining momentum across urban and rural markets alike. As wedding season approaches, and uncertainty looms around international tariffs, many are choosing to buy now rather than wait, especially with the possibility of prices rebounding in the near future.

Jewellers, regulators, and consumers alike are adapting to the new gold market realities, making this a defining moment for the Indian jewellery sector in 2025. Whether the trend towards lower caratage will sustain long-term remains to be seen, but for now, it is reshaping consumer behaviour and market strategy in a significant way.

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