As Gold Traders Struggle, India’s Politics Misses the Real Story

For generations, gold has occupied a near-sacred place in Indian households—an emotional asset as much as a financial one. From wedding trousseaus to emergency savings, the yellow metal symbolised security, status and continuity. It was not merely bought; it was inherited, displayed, pledged and protected. Yet in 2025–26, gold appears to be losing some of its traditional sheen.

Across key consumption centres—Telangana, Mumbai, Chennai and Gujarat—jewellery sales have slowed perceptibly. Record-high prices have pushed gold beyond the psychological comfort zone of middle-class families. Weddings continue, but the scale has changed: lighter ornaments, fewer pieces and a visible tilt towards minimalist designs. What was once an unquestioned purchase has become a carefully weighed decision.

Equally significant is a quiet but decisive shift in investment behaviour. Younger Indians, less emotionally tied to physical gold, are diversifying into equities, mutual funds, digital gold and even alternative assets. Transparency, liquidity and the promise of higher returns are trumping the age-old comfort of locker-held jewellery. Added to this are higher making charges, tighter regulatory scrutiny, and growing concerns over resale value—all of which have dampened enthusiasm for physical gold.

This is not to suggest that gold is becoming irrelevant. In times of economic uncertainty, it still retains its status as a hedge and a store of value. But its dominance is clearly being challenged. India’s gold demand in 2025 stood at about 710.9 tonnes, yet the steep rise in prices has reportedly led to a 24 per cent decline in demand. Traders say holding inventory now feels more like a gamble than a safe bet. Even investors are unsure whether this is the right moment to enter the market.

The stress is visible on the ground, particularly in Gujarat, long considered the nerve centre of bullion and jewellery trade. The mood there is sombre. Jewellery manufacturers are sitting on losses, workers are being laid off, and buyers are either walking away disappointed or downgrading purchases. According to officials of bullion associations, footfall has thinned dramatically. Some traders admit that they open shops only for a few hours—often till lunchtime—after which there is little reason to stay back. Paying wages itself has become a challenge.

Silver, traditionally seen as the poor cousin of gold, has fared no better. Extreme volatility has wreaked havoc. A tonne of silver that once cost around Rs10 crore shot up to Rs36 crore barely weeks ago and has since fallen to about Rs26 crore. This wild swing has destabilised the trade. In Rajkot, a major silver hub, traders claim that over 40 firms have declared insolvency. Manufacturers are struggling to settle accounts as the gap between production and delivery has become unmanageable. Wholesalers, facing sluggish sales, have downgraded purchases and delayed payments.

Mumbai’s iconic Zaveri Bazar tells a similar story. Footfalls have declined and purchases are routinely postponed. “People come, check prices and step back,” say bullion association sources. Interestingly, while gold sales have softened sharply, silver in Mumbai continues to see some demand—unlike in Rajkot, where both metals have taken a hit. Yet even here, those who bought gold coins in better times are finding few buyers willing to absorb them at current rates.

One of the clearest indicators of stress is the collapse of traditional monthly gold savings schemes. Under these plans, largely patronised by lower middle- and middle-class women, customers deposit a fixed amount for 11 months, with the jeweller adding the 12th instalment. At the end of the term, the accumulated amount is used to buy jewellery at prevailing prices. Today, after a year of disciplined saving, many women find they cannot even afford a decent pair of earrings. The promise that once underpinned these schemes has been hollowed out by runaway prices.

Compared to Gujarat and Mumbai, Telangana—and Hyderabad in particular—appears marginally better placed, but the stress is undeniable. Traditionally robust due to weddings and festivals, demand has softened. Markets such as Gulzar Houz, Sultan Shahi and Pot Market report lower volumes. Artisans speak of a sharp decline in job work, leading to idle days and under-employment among traditional craftsmen.

The consequences are not merely economic; they are deeply social. Rising input costs and competition from large corporate chains have forced many skilled goldsmiths to seek alternative livelihoods. Traditional designs are quietly disappearing from workshops. The tragedy of a goldsmith in Medak, driven by mounting distress and declining business to take his own life, is a grim reminder of how macroeconomic shifts translate into human suffering.

While there are no reports yet of mass layoffs in Telangana’s jewellery firms, the strain on smaller, family-run and unorganised players is unmistakable. Unlike branded chains that can absorb inventory losses and ride out volatility, these businesses operate with thin margins and limited buffers. The industry is clearly at an inflection point: adapt to new consumer behaviour and pricing realities, or risk further erosion of livelihoods and craft heritage.

What makes this moment more troubling is the absence of serious political engagement with these real, lived economic problems. The country’s political opposition, in particular, appears trapped in a state of thought paralysis—more invested in disruption than diagnosis. Instead of engaging with issues affecting traders, artisans and workers, the focus remains on rhetorical battles over which businessman is or is not in jail, or sweeping claims that the country has been “sold off” through trade deals.

There is little evidence of careful reading of budget documents or understanding of policy fine print. Parliamentary debate has given way to a “shoot-and-scoot” strategy: throw accusations, create noise and exit the House. Meanwhile, sectors like bullion and jewellery—deeply entwined with employment, culture and household savings—struggle quietly with volatility, uncertainty and change.

Gold may no longer glitter the way it once did. But the challenges facing those who depend on it deserve far more attention than they are currently receiving—from markets, policymakers and politics alike.

(The author is a former Chief Editor at The Hans India)