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Gold sales remained subdued during this Ganesha Chaturthi, with industry experts estimating a nearly 15% year-on-year decline in sales volumes, largely due to elevated gold prices, which made the precious metal less affordable for consumers. As a result, buyers reduced the quantity of gold purchased and increasingly opted for lighter jewellery. The festive season in India starts in August-September around Ganesh Chaturthi. This is the time when gold sales rise, driving the prices higher. However, this time around, sales remained weak on Ganesh Chaturthi. The reason, as per experts, is simple. Domestic spot gold prices have surged over the last two years, making gold expensive for buyers and weighing on demand. With prices much higher than a year ago, families are preserving their festive buying tradition but choosing lighter pieces, exchanging old jewellery, or buying smaller quantities. "Ganesh Chaturthi gold sales fell by roughly 15% because domestic 24K prices surged nearly 125%, rising from ₹69,000– ₹70,000 to over ₹1,57,000 per 10 grams over 2 to 3 years. This extreme price jump, coupled with 10–25% making charges and 3% GST, pushed heavy physical jewellery beyond reach, forcing buyers toward lightweight ornaments, coins, and paper gold," Vandana Bharti, the head of commodities research at SMC Global Securities, noted. A decline in jewellery sales volume is not a reflection of low interest in gold, but shows a change in how people buy gold when prices are soaring. Spot gold prices traded above ₹1,51,000 per 10 grams on Wednesday afternoon in Ahmedabad. Gold prices have surged sharply over the last two years due to weakness in the Indian rupee against the US dollar. Since international gold is priced in US dollars, the rupee's weakness raises import costs and duties, thereby increasing global prices. "The 15% fall in Ganesh Chaturthi sales volumes doesn't mean Indians have lost their love for gold. It shows a change in how they buy it. In one year, domestic prices have risen by about 60% due to the global rally, the rupee's weakness, and the April hike in import duty from 6% to 15%. At these levels, a traditional heavy necklace no longer fits the family budget. So, buyers are choosing lighter jewellery, exchanging old pieces, and moving investment money into coins, digital gold and ETFs," said Akshat Garg, the head of research and product at Choice Wealth. There is increased interest in digital gold and ETFs. Garg pointed out that gold ETF inflows rose 67% month-on-month to ₹2,597 crore in August, taking holdings to 121 tonnes. Digital gold purchases more than doubled year-on-year in August, while gold imports fell 58% to $2.3 billion. "Consumers are now keeping jewellery and investment separate. They buy jewellery with a purpose, such as for weddings, and hold investment gold in financial form. That form has no making charges, is easy to store and can be bought in small amounts," said Garg. According to SMC Global Securities' head of commodities research, financial entry barriers also favour digital gold and ETFs, where consumers can start investing with just a few hundred rupees without needing large capital reserves. Additionally, managing digital gold or Demat accounts eliminates the significant risks of theft, locker charges, and security concerns associated with holding high-value physical metal at home. "This shift toward digital gold, ETFs, and bullion coins will continue as primary investment avenues because they offer 100% purity, zero making-charge loss, and quick execution. Physical gold will retain its cultural status for weddings and major rituals, but routine festive and investment demand is permanently migrating to paper assets," said Bharti. Aditya Agarwal, CFA, Chief Investment Officer at Avisa Wealth Creators, underscored that for buyers who treat gold primarily as an investment, coins and ETFs are gaining appeal because they avoid jewellery-making charges. ETFs also make it easier to buy and sell in smaller amounts. Agarwal expects investment buying through coins and ETFs to continue even if jewellery demand improves during the wedding season. Digital gold may also attract buyers, though it does not carry the investor protections available to SEBI-regulated gold ETFs. Bharti believes gold prices remain in a structural long-term bullish trend supported by central bank accumulation, ongoing currency devaluation, international conflicts, and rupee weakness, though minor consolidation phases may occur following such sharp multi-year rallies. However, there could be short-term volatility, as expectations of higher US interest rates may weigh on prices, while geopolitical risks and central bank purchases may provide support. "We remain positive on gold over the medium to long term, though prices may remain volatile in the near term. The trend towards these investment options is likely to continue," said Satish Dondapati, Fund Manager - ETF, Kotak Mutual Fund. Garg sees the corrections in gold prices as chances to accumulate rather than a reversal of the trend. "For investors, we recommend keeping 10–15% of the portfolio in gold, built up in stages through ETFs or gold funds rather than a single lump-sum purchase," Garg said. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This article is for educational purposes only and does not constitute investment advice. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary. 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