While fall in prices usually lead to higher demand, gold jewellery buyers tend to postpone purchases in anticipation of further decline.
The sharp fall in gold prices, coupled with subdued demand, is expected to exert pressure on margins of jewellery companies in the June quarter.
Gold prices have been on a steady fall both in the domestic and international markets despite the simmering war between the US and Israel.
The yellow metal has fallen by ₹25,195 or 14 per cent to ₹1,44,782 per 10 grams from its high of ₹1,69,977 per 10 grams recorded on May 13, in line with the global market trends.
This fall has occurred despite the import duty being increased to 15 per cent from 6 per cent in May to curb imports.
In the US, spot gold slipped to its lowest level in nearly 11 weeks to $4,181 per ounce on Thursday.
While fall in prices usually lead to higher demand, gold jewellery buyers tend to postpone purchases in anticipation of further decline.
The margins of leading jewellery companies have already come under pressure in Q4 and retailers carrying inventory bought at higher prices could potentially face mark-to-market losses.
Gold imports surged 24 per cent to $72 billion in FY26, prompting Prime Minister Narendra Modi to appeal to consumers to reduce gold purchases in order to limit the impact on current account deficit.
Anil R, senior research analyst, Geojit Investments, said, “The fall in gold prices from March highs is expected to weigh on June quarter margins for jewellery companies due to high-cost inventory and elevated stocking levels in Q4.” He added that while improvements in product mix, making charges, and hedging strategies may provide some cushion, they are unlikely to fully offset the impact of the sharp price decline.
Lower gold prices should support demand, particularly in retail segment, although expectations of further corrections could temporarily delay purchases, creating a timing mismatch between margin pressure and volume recovery, he added.
Sunil Katke, Head of Commodities Retail Business, Kotak Securities, said, “Jewellers may attempt to lower the impact of fall in gold prices by increasing making charges and adopting fixed making charges per gram rather than linking it to gold prices.”
He added that most large organised jewellers also maintain hedging strategies on MCX to limit the impact of gold price volatility.
“We do not expect a meaningful slowdown in jewellery demand solely due to the Prime Minister’s remarks. The comments appear to be aimed at reducing India’s dependence on imported gold rather than directly discouraging domestic jewellery purchases,” he said.
Feroze Azeez, Joint CEO, Anand Rathi Wealth, said, “The recent correction in gold prices could create some pressure on jewellery companies in Q1, although the impact will vary across different companies.”
Jewellery retailers generate profits from two avenues – making charges and mark-to-market gain on jewellery inventory. With prices declining from their highs, retailers who bought gold at elevated levels may incur some inventory-related losses, which could affect margins during the quarter, he added.
Published on June 11, 2026
