Indians part with old jewellery to cash in on soaring gold prices

Kolkata: Old-gold-for-cash transactions have risen to around 20% of business in August so far from just 5% a year ago, as Indians cash in on household gold amid record prices and rising living costs. Gold prices have crossed ₹1.6 lakh per 10 gm and rose 14% so far this month, and consumers are increasingly liquidating household gold to meet expenses, while also seeking to lock in gains amid uncertainty over how long the rally will last.

Gold was trading at ₹1.62 lakh per 10 gm in Mumbai's spot market on Tuesday. Kalyan Jewellers and Tanishq have introduced or expanded cash-for-gold options since June, while Joyalukkas also offers customers the facility. The move brings a service traditionally associated with smaller and regional jewellers into the organised retail segment.

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Under the model, customers sell old jewellery to retailers for cash rather than exchanging it for a new purchase. For jewellers, the programme provides another channel to source recycled gold at a time when record prices are weighing on fresh gold purchases.

"Cash for gold is really catching up, and it should ideally negate the margin dilution, which happens due to the exchange," said Ramesh Kalyanaraman, executive director, Kalyan Jewellers at the company's Q1 analyst call. The company said the cash-for-gold share of its business moved into double digits in the June quarter from single digits previously. "The consumers are slowly understanding that they can utilise household gold to buy other things. Inflationary pressure too is forcing people to liquidate a portion of their household gold," said Bhargav Vaidya, a gold trade analyst.

The shift comes as record gold prices reshape consumer behaviour. While expensive gold has prompted some consumers to defer fresh jewellery purchases, it has simultaneously increased the value of existing household holdings, making them a more attractive source of liquidity. Jewellers said the increase in cash transactions is particularly visible among consumers seeking to take advantage of current prices rather than exchange old jewellery for new pieces.

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"The footfall has increased in the last four days as consumers feel that they should take advantage of the current price if the rally does not continue in the coming days," said Varghese Alukkas, managing director, Jos Alukkas, which has 67 stores across South India.

Internationally, gold and silver pulled back on Tuesday after touching their highest levels in more than three months. Traders are looking at upcoming US inflation data and a speech later this week from Federal Reserve chair Kevin Warsh. The Federal Reserve is yet to give a clear signal that it was prepared to take a tougher stance on inflation, while concerns over dollar debasement are expected to keep gold supported in the coming weeks.