With gold prices hovering near record highs, Indian shoppers are finding new ways to keep their festive purchases going. While some are waiting for prices to cool, others are turning to old jewellery to fund new purchases. Tanishq is seeing this shift play out in its stores, with more than half of its transactions now involving some form of gold exchange. In an interview with The Economic Times, Titan Jewellery division CEO Arun Narayan talks about changing consumer preferences ahead of Dhanteras, the impact of Prime Minister Narendra Modi’s appeal to curb gold purchases, the growing appetite for natural diamonds and why demand for gold coins may lose some shine this festive season.

Edited excerpts:

Gold prices have been hitting record highs, and there is a watchful eye on import bills as well. How are you reading consumer sentiment as we head into peak Dhanteras shopping?

Thanks for addressing the most important question on everyone's mind. We've seen a quite interesting trend in gold—contrary to expectations that it would continually grow, it’s been largely range-bound this year. There have been periods where gold rates softened and periods where they moved upward, so we’ve seen bidirectional movement overall.

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Whenever gold rates soften, we notice a lot of fence-sitters coming back to buy jewellery. As prices start moving upward again, people tend to wait and see if rates will stabilize or drop.

At the moment, we expect this festive season to be a good one. We are hoping to sustain our Q2 momentum through the festive period. We are seeing two distinct types of customers:

Value Seekers: Consumers who are very watchful of gold rates. They are looking to buy jewellery not just for the auspiciousness of occasions like Dhanteras, but to acquire pieces that hold significant long-term value and meaning.

Design Seekers: Consumers looking for exciting designs to add to their personal collections.

Our approach is twofold: keeping jewellery highly accessible while introducing exciting new lines. Our latest Dhanteras collection is called "Adhyantara", inspired by cosmic elements combined with traditional Indian karigari.

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The only new signal we are picking up—partly due to the high base of sales last year—is that the demand for coins and investment buying seen in Quarter 2 has tapered off a bit. We expect that trend to persist through the festive season, with more consumers preferring to buy jewellery over coins.

Any particular reason why demand for gold coins has tapered off?

Last year, demand went up significantly—growth was between 60% and 80% for a good part of the year. Because gold rates are currently range-bound without a strong upward rally, investment-focused buyers appear to be waiting on the sidelines, while others are opting for jewellery instead.

Do you think the Prime Minister's appeal to curb gold purchases will have any effect on Dhanteras or Diwali purchases?

That appeal first came around May 12th, and we did see an initial reaction. Consumers contacted our retail stores asking how they should proceed, with some choosing to hold off temporarily.

In response, we renewed our campaign around the Old Gold Exchange Program. We clarified to consumers that the goal is to conserve foreign exchange—by exchanging old gold, they actively contribute to the country's economic strength, which aligns with leadership goals.

We’ve seen a positive month-on-month increase in purchases through gold exchange. Historically, Indian consumers preferred to accumulate gold rather than trade it in. Over the last year—especially following the appeal—consumers have become far more open to exchanging idle gold, broken jewellery, or coins sitting in lockers. It recycles and recirculates existing domestic gold reserves, which is a very positive development.

Can you share what percentage of your sales have come from the Old Gold Exchange Program recently?

Over 50% of transactions in our stores now feature an element of exchange. This includes both gold bought elsewhere and existing Tanishq pieces brought in for upgrades.

Has the availability of recycled gold altered your fresh bullion procurement plans?

Our bullion procurement plans are dynamic—they factor in what we receive from consumers first, and we procure fresh gold only to meet the remaining balance. As consumer gold exchanges grow, our fresh import requirements decrease proportionally.

Speaking of the El Niño ('the little boy' in Spanish) effect—a weak monsoon can reduce rural incomes and potentially dent demand. Have you seen that play out over the last three months?

We haven't seen that play out yet, though we remain watchful. Tanishq operates stores in tier-3 and tier-4 towns with populations under 100,000, so we have a strong footprint in regions vulnerable to rural income shifts. However, to date, sales in these areas have remained steady.

What is Tanishq's outlook for the upcoming wedding season, and which factors will shape demand?

We are approaching the festive and wedding seasons with optimism. Because gold rates remain high, our focus is on maintaining accessibility through the Gold Exchange Program, offering more 18-Karat options and the best gold rate guarantee.

Furthermore, natural diamond jewellery has seen a major surge since January of this year.

How much of that interest in natural diamonds has translated directly into sales growth?

Significantly. As reflected in our Q2 performance, interest in natural diamond jewellery has translated directly into sales across the industry. After a two-year lull, demand has surged consistently since January.

Gold imports fell by nearly 45% in August. What do you believe drove that steep decline?

Import volumes in terms of tonnage have decreased primarily due to elevated gold prices and import duty impacts earlier in the year. While volume in kilograms has dropped, overall market value in rupee terms remains higher than last year.