Gold Jewellery Demand to Rise 12–14% in Value Despite Falling Volumes in FY26: ICRA

India’s domestic gold jewellery consumption is projected to grow by 12–14% in value during the fiscal year 2026, driven by rising gold prices, expanding retail networks, and increased market consolidation, according to a new report by ratings agency ICRA.

Following a sharp 33% increase in gold prices in FY2025, ICRA anticipates a continued upward trend in FY2026. While this will support growth in value terms, actual consumption volumes are expected to shrink. The report forecasts a 9–10% decline in jewellery volumes this fiscal, following a 7% drop last year.
“Despite elevated prices, demand will be supported by further appreciation in gold rates, expansion by organised retailers, and a shift in market share from the unorganised sector. Additionally, a higher number of auspicious days in the fiscal will help sustain demand,” said Jitin Makkar, Senior Vice President and Group Head at ICRA, as quoted by ANI.

In FY2025, gold jewellery consumption had risen by 28% in value, primarily due to the surge in prices. ICRA notes that current gold prices are already about 20% higher than the average for FY2025, reinforcing expectations of value-led growth.

Meanwhile, the investment demand for gold continues to remain strong. Consumption of gold bars and coins surged by 17% in FY2024 and 25% in FY2025, reflecting investor preference for safe-haven assets amid global macroeconomic uncertainties and geopolitical tensions. In FY2026, ICRA expects demand for bars and coins to grow by another 10%, contributing to around 35% of the country’s total gold demand.

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On the financial front, organised jewellers are set to benefit from improved profitability. Operating margins are expected to expand by 30 basis points to 7.2% in FY2026. However, net margin gains will be modest—limited to around 10 basis points—due to higher financing costs.

“The rise in working capital requirements, driven by elevated gold prices and planned retail expansion, along with increased Gold Metal Loan (GML) rates, will restrict net margin improvements,” Makkar added.