Gold recycling nearly doubles in India as prices escalate

NEW DELHI: When Sanjay Sharma, a professor, decided to purchase a diamond ring for his wife, he preferred to buy one in exchange for a gold chain he had bought almost two decades ago. He had to shell out only Rs 25,000 in cash against Rs 1 lakh for a new ring.
“Gold is an investment option. But I did not want to withdraw too much cash from my account as my expenses are already high and jewellery prices too have escalated,” he said. With gold prices going through the roof, consumers are trading old jewellery for new.

Market watchers say recycling of gold in the country has nearly doubled over last year amid rising household budgets and high gold prices.

During the April-June quarter, when recycling of gold was down across all markets, India reported a significant increase as consumers sought to capitalize on the increased price of the yellow metal, a report by the World Gold Council said.

A weak rupee pushed the prices in India further up. Gold prices, which have been hovering around Rs 29,000 for the last quarter, touched a record high of Rs 31,300 on Saturday in New Delhi. In Mumbai too, the yellow metal scaled another alltime peak of 30,870.

Recycling old jewellery for new is generally a phenomenon of the hinterland. But, a consistent increase in the price of the precious metal this year has created a large pool of such customers in urban areas too. High inflation and a negative buying sentiment has affected gold biying in the country.
“Recycling old jewllery has been more significant this year as people don’t want to buy fresh at high prices. Sale of scrap gold for new jewellery has shot up nearly 40% as compared to last year,” said Bombay Bullion Association president Prithviraj Kothari.
Industry estimates suggest that the growth in recycling of gold on a year-on-year basis is not more than 25% in a normal year. While it is mostly the local traders who recycle old jewellery , branded jewellers too have encountered a significant surge this year. The demand for recycling has increased over 10-15 % this year against last year, branded jewellery retailers said.
“Most consumers are opting to add little money to their old gold to buy new jewellery as there is a liquidity crisis in the market,” said Sanjeev Agarwal, CEO, Gitanjali. The marriage season has further pushed consumers to sell old gold as they seek to cut expenses.

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On Saturday, gold hit a record high of 31,300 in Delhi; scaled another peak in Mumbai at 30,870, The demand for recycling has increased by up to 15% this year as compared to last year, branded jewellery retailers said. äRecycling of gold was down across all markets globally, except India, in April-June