Modi’s gold call faces a festive reality check

India's love for gold may face a reality check during the festive season. Prime Minister Narendra Modi urged citizens to purchase the yellow metal only when necessary, following a similar appeal in May. The Prime Minister's message is likely to sway consumer sentiment, as consumers hold back cash ahead of the main buying season in October and November, with Navratri, Dhanteras and weddings driving further purchases.

While total gold spending remains resilient, volume is expected to be softer this festive season, with consumers turning to lower-carat options and old gold exchanges to keep budgets under control. Organised jewelers are expected to outshine unorganised players, capturing a bigger share of the market due to brand trust and aggressive expansion.

Despite higher gold prices, organized retailers expect a 20% to 25% increase in festive-season revenue, although this may mask a decline in the quantity of gold sold as consumers buy lighter pieces and smaller quantities to stay within their budgets.