Gold soars 60% YoY: What's the best investment play?
Gold has been on a dream run over the past one year with prices nearly doubling. The price has surged nearly 60% year-on-year (YoY) in the December quarter. On MCX, gold recently traded near Rs 1,58,500 per 10 grams. As gold climbs higher, is the demand for jewellery slowing down? And if investors want to buy, should they look at gold or jewellery stocks?
The common narrative is that when gold becomes expensive, people buy less jewellery. To an extent, that logic holds true. Higher prices increase the "entry ticket size," making it harder for small buyers to afford traditional purchases. However, the December quarter -- typically the strongest for jewellers due to festivals and wedding season -- held steady.
According to Ravi Singh, Chief Research Officer at Master Capital Services, the festive season actually saw strong performances from leading jewellery companies. "Interestingly, the rise in gold prices acted as a pull factor in the festive season, with consumers accelerating purchases in anticipation of further price increases," he says.
Many buyers rushed to lock in prices before they moved even higher. Jewellers also benefited from gold exchange schemes, where customers bring old jewellery and upgrade to new pieces, reducing the cash outflow.
Motilal Oswal too said that despite steep gold inflation, consumer demand for top brands remained resilient in Q3FY26. Same-store sales growth was strong, largely driven by higher value rather than volume. In simple terms, people spent more money — but did not necessarily buy more grams of gold.
Also read: Risk-on trade back? Smallcap stocks rally up to 28% in 2026, but market breadth stays weak
Are volumes slowing down now?
While revenue numbers for some listed jewellers looked strong in the December quarter, Titan, India’s largest jewellery retailer, has acknowledged that customer growth remained "muted." Chief Financial Officer Ashok Kumar Sonthalia pointed out that sales growth is being driven more by price increases than by higher volumes.
"We would like it to be balanced, where we get buyer growth as well as growth in ticket prices," he said. Data from the World Gold Council shows that India's gold jewellery volumes dropped 24% to 430.5 tonnes in 2025. Rising prices have squeezed buyers with fixed budgets, forcing them to reduce the quantity they purchase.
So while top-line growth looks impressive, investors need to understand that much of it is "value growth," not "volume growth."
Why jewellery stocks are moving differently
In the last six months, performance among jewellery stocks has been mixed. Kalyan Jewellers is down 20%, while Titan is up 20%. PN Gadgil has gained 2%, Senco Gold 11%, and Thangamayil Jewellery has surged 88%.
Khushi Mistry, Research Analyst at Bonanza, says jewellery stocks haven't consistently mirrored gold's rally. "Gold's rise often makes jewellery less affordable, hurting volumes, though strong festive and wedding demand can offset this in patches," she said.
Jewellery companies face business risks that gold itself does not. They deal with inventory management, store expansion costs, competition, product mix challenges and margin pressures. High gold prices can also hurt margins. Motilal Oswal expects margin pressure due to adverse product mix and high gold coin sales. Coins typically carry lower margins than studded jewellery.
Gold vs jewellery stocks: What's the better investment right now?
Ravi Singh believes brand strength and formalisation are key themes. "Consumer preference is steadily shifting toward organised players, leading to a decline in market share of unorganised local players," he says. This formalisation trend is a strong structural tailwind for leading jewellery brands.
In other words, strong brands that expand stores consistently, grow same-store sales and deepen customer engagement could create long-term shareholder value. However, Khushi Mistry offers a more cautious take. She says direct gold exposure -- through bullion or gold ETFs -- offers a purer play on price appreciation.
"Select jewellery stocks may outperform if demand, margins and fundamentals improve, but they carry more business risk than gold itself," she says.
Gold's outlook
In the near term, gold outlook remains firm. Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, says gold has held strong above key levels.
"Gold traded firm with gains of Rs 1,700 at Rs 1,58,500 as participants position ahead of key US data. Immediate support is seen near Rs 1,55,000, while resistance is placed in the Rs 1,60,000-1,62,000 zone," he says. Volatility may increase around global data releases, but the short-term trend remains intact.
If gold continues to rally sharply, affordability concerns could intensify and volume growth for jewellers may stay under pressure. For conservative investors who want to hedge against global risks, analysts say gold itself may be simpler and less risky. For growth-focused investors willing to accept business volatility, select jewellery stocks with strong brands, healthy balance sheets and consistent store expansion could deliver better long-term returns.
The key is to track same-store sales growth, volume trends, margins and management commentary closely.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
The common narrative is that when gold becomes expensive, people buy less jewellery. To an extent, that logic holds true. Higher prices increase the "entry ticket size," making it harder for small buyers to afford traditional purchases. However, the December quarter -- typically the strongest for jewellers due to festivals and wedding season -- held steady.
According to Ravi Singh, Chief Research Officer at Master Capital Services, the festive season actually saw strong performances from leading jewellery companies. "Interestingly, the rise in gold prices acted as a pull factor in the festive season, with consumers accelerating purchases in anticipation of further price increases," he says.
Many buyers rushed to lock in prices before they moved even higher. Jewellers also benefited from gold exchange schemes, where customers bring old jewellery and upgrade to new pieces, reducing the cash outflow.
Motilal Oswal too said that despite steep gold inflation, consumer demand for top brands remained resilient in Q3FY26. Same-store sales growth was strong, largely driven by higher value rather than volume. In simple terms, people spent more money — but did not necessarily buy more grams of gold.
Also read: Risk-on trade back? Smallcap stocks rally up to 28% in 2026, but market breadth stays weak
Are volumes slowing down now?
While revenue numbers for some listed jewellers looked strong in the December quarter, Titan, India’s largest jewellery retailer, has acknowledged that customer growth remained "muted." Chief Financial Officer Ashok Kumar Sonthalia pointed out that sales growth is being driven more by price increases than by higher volumes.
"We would like it to be balanced, where we get buyer growth as well as growth in ticket prices," he said. Data from the World Gold Council shows that India's gold jewellery volumes dropped 24% to 430.5 tonnes in 2025. Rising prices have squeezed buyers with fixed budgets, forcing them to reduce the quantity they purchase.
So while top-line growth looks impressive, investors need to understand that much of it is "value growth," not "volume growth."
Why jewellery stocks are moving differently
In the last six months, performance among jewellery stocks has been mixed. Kalyan Jewellers is down 20%, while Titan is up 20%. PN Gadgil has gained 2%, Senco Gold 11%, and Thangamayil Jewellery has surged 88%.
Khushi Mistry, Research Analyst at Bonanza, says jewellery stocks haven't consistently mirrored gold's rally. "Gold's rise often makes jewellery less affordable, hurting volumes, though strong festive and wedding demand can offset this in patches," she said.
Jewellery companies face business risks that gold itself does not. They deal with inventory management, store expansion costs, competition, product mix challenges and margin pressures. High gold prices can also hurt margins. Motilal Oswal expects margin pressure due to adverse product mix and high gold coin sales. Coins typically carry lower margins than studded jewellery.
Gold vs jewellery stocks: What's the better investment right now?
Ravi Singh believes brand strength and formalisation are key themes. "Consumer preference is steadily shifting toward organised players, leading to a decline in market share of unorganised local players," he says. This formalisation trend is a strong structural tailwind for leading jewellery brands.
In other words, strong brands that expand stores consistently, grow same-store sales and deepen customer engagement could create long-term shareholder value. However, Khushi Mistry offers a more cautious take. She says direct gold exposure -- through bullion or gold ETFs -- offers a purer play on price appreciation.
"Select jewellery stocks may outperform if demand, margins and fundamentals improve, but they carry more business risk than gold itself," she says.
Gold's outlook
In the near term, gold outlook remains firm. Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, says gold has held strong above key levels.
"Gold traded firm with gains of Rs 1,700 at Rs 1,58,500 as participants position ahead of key US data. Immediate support is seen near Rs 1,55,000, while resistance is placed in the Rs 1,60,000-1,62,000 zone," he says. Volatility may increase around global data releases, but the short-term trend remains intact.
If gold continues to rally sharply, affordability concerns could intensify and volume growth for jewellers may stay under pressure. For conservative investors who want to hedge against global risks, analysts say gold itself may be simpler and less risky. For growth-focused investors willing to accept business volatility, select jewellery stocks with strong brands, healthy balance sheets and consistent store expansion could deliver better long-term returns.
The key is to track same-store sales growth, volume trends, margins and management commentary closely.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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