When gold turns pricier, diamonds turn desirable for Gen Z

P K Krishnakumar

As gold prices continue their upward spiral, consumer preferences are beginning to shift—and jewellers are quickly adapting. The latest trend? A growing inclination toward alternative jewellery, with buyers sometimes opting for diamond pieces over traditional heavy gold ornaments.

Take the case of Mr. Unnikrishnan of Thrippunithura and his wife. A few months ago, they set out to buy a gold necklace in Kochi as a wedding gift for their niece. However, with gold prices soaring past ₹50,000 per sovereign (8 grams), purchasing a good-quality necklace would have cost them around ₹3 lakh.

"The necklaces were heavily ornate, and we figured the young bride might not prefer something so traditional," Mr. Unnikrishnan recalls. "The salesman suggested we consider a diamond necklace instead, which was surprisingly more affordable."

In the end, they chose a diamond chain—sleek, elegant, and priced at ₹2.3 lakh. To cover the cost, the couple traded in old gold ornaments and a gold coin worth ₹1.6 lakh, paying the remaining amount in cash.

The jewellers are fast adapting to the changing tastes of the young generation
for whom heavy jewellery has become a no-no. Those who buy heavy
jewellery keep them in bank lockers after wearing them for their wedding. Many view diamonds as an option for simple necklaces and rings.

Lightweight ornaments

``The demand for the lightweight 18-carat gold ornaments is rising. It is cheaper too as the price of 18-carat gold is about the same as last year’s 22-carat price. And about 60 percent of the purchases are either by exchanging old ornaments with new ones or by the sale of old jewellery,’’ said S Abdul Nazar, a leading jeweller and the 
treasurer of All-Kerala Gold and Silver Merchants Association.

As the demand rises, jewellers are stocking up on lighter gold ornaments. The volume of 
gold sales has been falling as the yellow metal prices keep surging. "Instead of making the 10-sovereign ornaments we used to, we are now designing five-sovereign ones keeping the same design, pattern and lustre. This way,  the ornament becomes lighter; and, it is easy on the pocket too,’’ said John Alukka, MD of Jos Alukkas Jewellery.

Though the jewellers' sales volume has slumped by around 40 percent with the
escalation in the gold price, their revenue has not declined much as the high price somewhat makes up for the fall in the volume. 

When it comes to wedding jewellery purchases, there's been a noticeable shift in how customers approach their buying decisions. Rather than requesting a specific number of sovereigns, more people are now focused on sticking to a cash budget.

"Earlier, customers would come in asking for, say, 20 sovereigns of gold," says Abdul Nazar. "But now they come with a budget in mind—₹10 or ₹15 lakhs—and ask to see ornaments that fit within that budget."

This change reflects a growing trend of practicality, with buyers prioritising financial limits over traditional quantity-based purchases, as gold prices continue to soar.

My ornaments, my way

Take another example. Twenty-five-year-old Akhila, who works for a private firm, wanted a new necklace studded with semi-precious stones that went with the blue colour of the saree she planned to wear to her cousin’s wedding. Though she already had a necklace, studded with red and green stones, it did not suit her blue saree. With the gold prices touching new highs, buying a new ornament was out of the question. She found a solution: she bought a made-to-order one-gram 24 gold covered chain studded with blue stones for Rs 7000.

While buying ornaments, Gen Z seems to be looking at factors such as convenience and customisation besides safety and security. They prefer lightweight ornaments that can be worn without much hassle or fear of loss and theft. 

The one-gram jewellery with a layer of 24- or 22-carat gold over copper or silver alloys is finding more takers, especially among the upper middle class, because of the above factors. While one sovereign of 22-carat gold may cost over Rs 63,000 (including GST and making charges) going by the current price, a good piece of one-gram gold ornament can be had at a quarter of that price. What’s more, it can be customised to one’s taste. 

``The young generation likes to get the ornaments customised to their tastes," said Preethi Prakash, director of Parakkat Jewellers, which specialises in one-gram gold jewellery. "Safety has also become a big concern as more and more women now travel to work. Many customers come to our shop straight from the airport to buy ornaments to wear to an event they are going to attend.’’ 

1-gram gold necklace is trending

Instead of spending lakhs of rupees on a gold necklace, a premium one-gram gold necklace can be had for around Rs 30,000-40,000 without compromising the looks. Apart from the price,  the added advantage is the leeway for customisation. ``For an occasional wear, it could last for years. But, for daily wear, careful handling will make it last for a couple of years. We have attractive exchange offers too,’’ Preethi Prakash said.

Another trend that is emerging is the high demand for online sales. The Jos Alukkas company has launched an online gold investment and sale platform called Digigold in association with MMTC. ``People can buy and sell gold on our platform. About 20 percent of the sale is actual jewellery purchases mostly used as gifts. People trust gold as an investment option as its value may not come down soon,’’ John Alukka said.

These trends could consolidate further as gold prices are predicted to soar further in the coming months. The jewellers reckon that the per sovereign price of 22-carat gold, which touched an all-time high of Rs 58,400 recently, could easily surpass Rs 60,000 if tensions persist in West Asia and the international prices currently around $ 2,730 per troy ounce crosses $2800. The gold sovereign price was around Rs 32,000 in 2020 and it took two years to reach Rs 40,000 and another two years to touch 48,000. But from March 2024
when it was hovering around Rs 48,000, it needed just six months to get to
Rs 56,000, spurred by West Asian turmoil and cut in interest rates by the US
Federal Reserve.