Indian consumers are fundamentally reshaping their relationship with jewellery, transforming it from a purely traditional and ceremonial purchase into a strategic wealth creation tool. This paradigm shift reflects changing investment preferences and the strong financial performance of precious metals in recent years.

Deloitte Report Reveals Investment Mindset Shift

Deloitte India's comprehensive report titled 'Go for Gold' presents compelling evidence of this transformation in consumer behavior. The study reveals that 86% of Indian consumers now consider gold and jewellery as effective assets for wealth creation, a figure that closely rivals the 87% preference for mutual funds and equities.

This data demonstrates how jewellery has evolved from being merely a cultural asset to becoming interconnected with mainstream investment markets. The investment-only preference shows particular strength among men and consumers aged 45 years and above, indicating growing concerns about wealth preservation and long-term financial security.

Generational Preferences Drive Market Evolution

Younger consumers are catalyzing significant changes in jewellery market dynamics through their distinct preferences and purchasing patterns. The research identifies a clear generational divide in design preferences and material choices.

Gen Z metal preferences show notable diversification:

• Silver preference: 51%
• Platinum preference: 34%
• Silver investment (Gen Z and Millennials): 45%

This shift toward silver reflects its affordability, trendy appeal, and suitability for daily wear, making it an accessible entry point for younger investors seeking precious metal exposure.

Expanding Purchase Occasions Beyond Weddings

Traditionally, wedding purchases dominated jewellery demand, accounting for 70% of the market. However, this pattern is changing significantly as consumers embrace jewellery for diverse lifestyle occasions.

Millennial purchasing patterns demonstrate this diversification:

• Birthday and anniversary purchases: 38%
• Daily or office wear: 32%
• Milestone celebrations (promotions, graduations): Notable segment

This broader range of purchasing occasions indicates jewellery's integration into everyday lifestyle choices rather than remaining confined to special ceremonies.

Strong Precious Metals Performance Drives Investment Appeal

The financial performance of precious metals over recent years has significantly contributed to their growing investment appeal among Indian consumers.

These impressive returns have reinforced precious metals' reputation as safe-haven investments during market volatility and uncertainty. Gold particularly serves as a wealth protection tool, while silver finds additional applications in industrial and commercial sectors.

Market Challenges and Investment Considerations

Despite the positive investment sentiment, the jewellery industry faces several operational and profitability challenges. Deloitte's analysis reveals that Indian jewellery retail businesses typically operate with EBITDA margins of 5-10%, significantly below the global average of 12%.

Key investment considerations for consumers include:

• Making charges ranging from 5% to 25% of jewellery value
• 3% GST on gold value
• Additional 5% GST on making charges
• Storage costs and security risks for physical gold
• No regular income generation unlike dividends or interest

While over 85% of jewellery sales remain offline through national chains, family jewellers, and local stores, Gen Z consumers increasingly rely on social media and internet searches for design discovery, though final purchases still occur through traditional channels.

The convergence of strong precious metals performance, changing consumer preferences, and evolving purchase patterns positions jewellery as a hybrid product combining financial stability with lifestyle fashion, marking its transition into mainstream wealth creation territory.

Precious metals gold and silver are experiencing unprecedented premium levels over international benchmarks in India, driven by widespread market speculation about potential customs duty increases in the upcoming Union Budget scheduled for February 1. The dramatic premium surge has created significant market disruptions and trading anomalies across both commodity exchanges and exchange-traded funds.

Premium Surge Reaches Abnormal Levels

The current premium spike represents a sharp departure from normal market conditions, with silver premiums exceeding ₹30,000 per kg and gold premiums reaching 3-4% above international rates. This marks a significant deviation from the typical minimal spread between Multi Commodity Exchange (MCX) and COMEX prices, signaling widespread market anxiety about possible policy changes.

"The premium in the Indian market is abnormally high this time because the market is expecting there may be a duty hike in the Budget. That's why the premium is increasing," explained Manoj Kumar Jain, Director and Head of Commodity and Currency Research at Prithvi Finmart.

Market Performance and Price Movements

The speculation has translated into substantial price movements across various trading platforms. The following table illustrates the significant gains recorded:

The ETF segment has shown particularly pronounced gains, with some gold ETFs recording nearly double-digit increases, reflecting heightened investor interest and speculation.

Technical Disruptions in Arbitrage Trading

The abnormal premiums are creating significant technical challenges for international arbitrage traders. These traders typically maintain long positions on COMEX while shorting MCX contracts to profit from price differentials. However, the widening spread is now causing substantial losses for these market participants.

"International traders also do arbitrage between COMEX and MCX. Normally international traders are long on COMEX, short on MCX. Now as the price is going up, the spread is increasing and they are incurring losses. So there is a technical reason as well for this premium," Jain explained.

Policy Speculation and Market Rationale

Market speculation centers on whether the government might reverse its July 2024 decision to reduce customs duty on gold and silver from 15% to 6%. The original duty reduction was designed to support the gems and jewellery sector while curbing smuggling activities.

Current market concerns focus on the relationship between rising gold prices and rupee depreciation. "Now rising gold prices are directly impacting rupee depreciation. The government may hike duty to protect rupee depreciation," Jain noted. This concern has gained prominence as the rupee recently plunged 67 paise to close at an all-time low of 91.64 against the US dollar.

Investment Recommendations and Outlook

Despite short-term volatility, analysts maintain a positive long-term outlook for precious metals. HDFC Securities noted that "based on the fundamentals and technical setup, gold and silver's long-term bullish trend seems intact and still has the potential to deliver extraordinary returns in the year 2026."

However, the brokerage cautioned that potential duty reductions could create downward pressure on domestic prices. Given current elevated premiums, particularly for silver, experts are recommending cautious positioning.

"Given the sharp rise in prices we have told clients to avoid silver. Better to have gold. Those investors having riskier assets in their portfolio, they must allocate more to gold," Jain advised. HDFC Securities recommended investors allocate up to 10% of their portfolio to precious metals, suggesting ETFs as the preferred investment vehicle.