RECORD-BREAKING GOLD JEWELLERY RECYCLING IN INDIA EXPECTED TO IMPACT GLOBAL PRICES
14th June 2023
The recycling of gold jewellery in India is poised to reach a new high this year, potentially matching the record set in 2019, according to the World Gold Council. The increasing prices of gold in the domestic market have prompted Indians to take advantage of the situation by selling their used gold jewellery in record amounts. P.R. Somasundaram, the regional chief executive officer for India at the World Gold Council, predicts that if local prices continue to rise, recycled bullion sales could surge by over 20%, reaching 119.5 tons, the same level as in 2019.
The rise in gold recycling is expected to have an impact on India’s gold imports. As the world’s second-largest gold importer, a reduction in India’s gold purchases could potentially exert downward pressure on international gold prices, which are currently hovering around $1,960 per ounce. The substantial increase in Indian gold prices, which have risen by nearly 20% in the past year, has been driven by a weakening rupee, making gold more expensive in the country.
Gold holds significant cultural and investment value in India, particularly in rural areas where access to banking services may be limited. Farmers often invest in gold after a successful harvest and later sell it to acquire seeds, fertilizer, and other necessities. Indian households and temples collectively possess approximately 25,000 tons of gold.
Furthermore, a poor monsoon season this year could further boost the sales of used gold jewellery. However, it is still too early to determine the impact, as the rainy season has just begun, as stated by Somasundaram.
Recent data from the World Gold Council reveals that Indian recycled gold sales, encompassing both bullion and jewellery sold for cash, increased by 25% in the first quarter of 2023 compared to the same period last year, amounting to approximately 35 tons. In contrast, purchases of bullion dropped by 17% to 112.5 tons during the same period.
Ashish Pethe, former chairman of the All India Gem and Jewellery Domestic Council, highlights that historically, around 25% of gold transactions in India involved the sale of old jewellery for cash. However, Ashish Pethe believes this percentage could reach 35% to 40% this year due to the rising prices of gold.
Note: The article is the property of SVAR Events & Media Network, and any imitation of the article will come under plagiarism.
