“They said my gold was safe. But when I went to collect, all I got was a bill — not a bangle.”
— Rashmi Shah, Ahmedabad.
As gold prices blaze to historic highs, touching ₹1,26,600 per 10 grams on October 8, 2025, India’s retail gold market is descending into chaos. Popular fixed-rate booking schemes, once hailed as a shield against market volatility, are unraveling, leaving thousands of small investors and festive buyers blindsided by steep additional costs. Jewellers had “booked” the gold ornaments for customers when gold averaged around ₹88,000–₹90,000 per 10 g. The schemes had a lure like "Zero" making charges. But now the same jewellers are citing fine-print clauses and hiking making charges by 20–30 percent, shattering the trust of families who saved for months to secure their gold at promised rates. With regulators silent and the commodity exchanges offering no safe haven, India’s bullion trade is teetering on the edge of a crisis.
What began as a cultural ritual — saving in gold for Dhanteras or Diwali — has morphed into a financial nightmare.
A Golden Dream Betrayed
Gold’s meteoric 43 percent rise in 2025—from ₹88,500 per 10 grams on January 1 to a peak of ₹1,26,600 on October 8, settling at ₹1,25,000 by mid-October—has upended household budgets during the festive season, a peak time for purchases. Fueled by global uncertainties, central bank buying, and a weakening rupee, the rally has seen an 18 percent spike since April alone. Yet, for those enrolled in fixed-rate schemes, the real pain stems not from market swings but from retailers’ broken promises.
These schemes, heavily promoted by major jewellery chains, allowed customers to pay monthly installments—tarting as low as ₹1,000—for 10 to 12 months, locking in gold rates at enrollment. Benefits included 5–10 percent discounts on redemption, waived or reduced making charges, or bonus installments. Upon completion, buyers could redeem accumulated gold for jewellery or coins, supposedly insulated from price fluctuations. But as gold’s surge outpaces projections, retailers are invoking obscure clauses like “subject to market adjustments” to impose charges of 20–30 percent, inflating final costs far beyond expectations.
“We paid ₹50,000 over 11 months for 5 grams at the locked rate, expecting zero making charges,” said a Mumbai-based teacher. “Now, they’ve added 25 percent fees, pushing our bill up by ₹18,000. It feels like a scam.”
Consumer forums are inundated with similar complaints, alleging hidden terms that allow fee hikes to offset the price rally.
Retailers’ Fine-Print Gambit
These schemes, which drew billions in deposits last year—one major chain alone reported ₹300 crore in 2024 inflows—were marketed as secure investments for middle-class families saving for weddings or festivals. But with gold’s 18 percent Q2 surge catching retailers off-guard, many are hiking making charges to protect shrinking margins. Festive demand has plummeted 20% to a five-year low of 20 tones, with buyers shifting to lightweight jewellery or 14-carat options to cope.
“Retailers banked on stable prices when launching these schemes,” said a former executive at a leading chain. “Now, they’re using vague terms to pass on losses.”
The practice is widespread, with complaints flooding consumer forums about delayed redemptions, forfeited installments, or demands for additional payments at current rates. In Delhi, a group of 50 investors filed a joint complaint against a major retailer, alleging they were forced to pay 28 percent making charges or lose their savings.
“They called it ‘policy revision,’” said one complainant. “We call it betrayal.”
MCX: A Flawed Hedge?
The turmoil extends to India’s commodity exchanges, where hedging offers little relief. MCX’s bullion contracts, labeled “compulsory delivery,” lure jewelers and investors seeking to lock in rates. Yet, a critical flaw undermines this promise: delivery is at the seller’s discretion. If sellers fail to deliver, they face only a 3 percent penalty plus replacement costs, leaving buyers empty-handed.
Meanwhile, buyers must take delivery or be declared defaulters, with the exchange stepping in to honor their obligations but offering no such guarantee for sellers.This asymmetry, ignored by the Securities and Exchange Board of India (SEBI), renders hedging ineffective.
“If you buy on MCX to secure gold for commitments, but if sellers default, you’re stuck,” said a Kolkata bullion trader. The disconnect fuels price distortions, mirroring the 8–15 percent gap in silver futures, and deters participation as vault stocks dwindle against rising open interest. “Calling it ‘compulsory delivery’ is misleading,” the trader added, warning of a looming delivery crisis.
Regulators on Mute
Despite the turmoil, no clear directive has come from SEBI, the Consumer Affairs Ministry, or the Reserve Bank of India — even though gold schemes often blur into unregulated deposit-like instruments. Legal experts warn that many such plans violate provisions of the Banning of Unregulated Deposit Schemes Act, since they promise returns tied to gold without being registered as financial schemes.
Legal experts warn that many gold schemes skirt the Banning of Unregulated Deposit Schemes Act, promising returns without proper registration.
Yet, no action has been taken, leaving investors to navigate a market where trust is eroding faster than gold’s shine. As Diwali looms, India’s bullion trade faces a reckoning. The yellow metal, long a symbol of prosperity, now reflects a harsher truth: in a market driven by greed and loopholes, the small investor pays the ultimate price.
Demand is projected to fall sharply in the coming months if prices remain above ₹1,20,000 per 10 grams. For families melting heirlooms or slashing wedding budgets, the broken promises of booking schemes cut deepest.
“Gold was our security,” said a Mumbai homemaker. “Now, it’s a financial trap."
Demand Slumps, Trust Evaporates
Festive gold demand — normally India’s busiest buying season — has plunged 25 percent, according to traders in Zaveri Bazaar and Coimbatore. Many are shifting to lighter ornaments, 14K designs, or even silver, as affordability collapses. Jewellery store owners whisper about shrinking margins and drying liquidity.
“Consumers are angry. Some think we tricked them. Others have simply stopped coming,” says one Mumbai jeweller, showing empty counters on what should be his busiest week of the year.
“Jewellers are squeezed between old contracts and new prices. Many are quietly reneging,” admits a senior member of a bullion trade body, requesting anonymity. “There’s panic among retailers who run aggressive schemes. They simply don’t have the inventory to deliver.”
Key Facts:
Price Surge: Gold up 43 percent in 2025 (₹88,500 to ₹1,26,600/10g peak on Oct 8; ₹1,25,000 now), with 18 percent gains since April.
Scheme Fallout: Retailers impose 20–30% making charges, citing fine-print clauses.
Demand Slump: Festive sales down 20%; 2025 volumes at 5-year low of 20 tonnes.
Exchange Flaw: MCX’s “compulsory delivery” contracts favor sellers, undermining hedging.
Regulatory Gap: SEBI offers no clarity, leaving investors exposed.
“They promised my gold was safe at last year’s rate. Now, I’m paying thousands extra or losing everything.”
— Mumbai teacher |
