THE HINDU festival of Akshaya Tritiya, celebrated on May 7th this year, is considered an auspicious time to buy gold. Queues outside Indian jewellery stores become so long that makeshift tents are set up to accommodate the rush. Cashiers hand-count wads of banknotes in conditions as noisy as those in a busy fast-food restaurant. The salesmen cater to a remarkable level of demand. As a group, Indians buy more gold than anyone apart from the Chinese (who have occupied the top spot since 2014). Indian households are reckoned to have a stockpile of gold worth $800bn. Yet the Indian market is not as healthy as it was. Purchases of the metal have fallen by around a fifth since their peak in 2010. Why is gold losing its sheen?

Start with changing tastes and preferences. Around a third of Indians are 18 to 35 years old. They often prefer to spend their money on electronic gadgets, purchased in monthly instalments on zero interest rates, rather than jewellery. In 2017 consumer electronics toppled gold as the second-biggest contributor to India’s national import bill, behind oil. Moreover, the tastes of those who buy gold appear to be changing. Heavy jewellery has given way to lightweight designs, sometimes with lesser caratage. “Gold is no longer a sign of wealth but of fashion,” admits one customer at a jewellery store in Mumbai.

Gold is no longer the go-to investment option for those whose money lies outside the formal financial system. In 2014 a state-sponsored programme opened millions of bank accounts. Mutual funds have returned 12.5% annually in the last decade. The Sensex stockmarket index has gained around 60% in the past five years. In that period, the price of gold rose, in rupee terms, by just 7% from a high base, a far cry from the 12 years until 2012 when it rose by over 500%. Its value as a hedge against inflation, at 3%, has diminished too.

India’s government has long tried to wean citizens off gold, almost all of which the country imports, contributing to the current-account deficit. Since 2012 officials have raised quotas on gold imports five-fold to 10%, but are wary of increasing the rate higher, lest they push the trade underground. Last year authorities seized 66kg of gold bars, worth $3m, hidden in four cars. Bootleggers will continue to seek creative ways to beat the system. But if consumers are reconsidering their love affair with gold, the government will not try to rekindle the passion.

Correction (May 22nd 2019): The original version of this article mis-stated the impact that the importing of gold has had on India’s current-account deficit. This has been been changed.