Net scrap supply of gold could jump 70% in Q3

Market analysts expect a 60-70 per cent jump in official net scrap supply — exchange of old gold jewellery for cash — in the third quarter due to a 32 per cent jump in the average quarterly price. Gross scrap supply in Q3 2018 was 51 tonnes, according to Metals Focus, data provider to World Gold Council (WGC).

Of this, 23 tonnes, or 45 per cent, was net scrap supply, or exchange of old jewellery for cash. In Q2 2019, gross scrap supply was 68.88 tonnes, and net supply was 37.9 tonnes, or 55 per cent of the gross number. Assuming that the gross supply in Q3 2019 rises to 60 tonnes (from 51 tonnes in Q3 2018) and the net scrap accounts for 65 per cent, or 39 tonnes, that translates into a 70 per cent increase in net scrap, said a source.

One of the reasons for this steep climb is the jump in average quarterly price to ₹36,070 per 10 gm (ex-GST), as per India Bullion and Jewellers Association data.

Amit Modak, CEO, PN Gadgil & Sons, said that in August business across his stores had fallen to 60 per cent from a year ago. Exchange of old gold jewellery for new dominated the business.