The lucrative gold prices have led to a surge in jewellery recycling, with estimates of up to 100-150 tonnes this month, as compared to 80 tonnes recorded last month. The increase is attributed to the spike in gold prices, which closed at ₹62,415 per 10 gram last Friday, as opposed to ₹60,579 on November 7. The significant rise in gold prices has dampened consumer interest in purchasing new jewellery, leading to an increased exchange of old jewellery for new designs, and in some cases, for cash at Zaveri Bazar in Mumbai.
This trend has been identified as a result of consumers taking advantage of the high gold prices and using the opportunity to update their jewellery collections without significantly depleting their savings. The surge in jewellery demand is also linked to the upcoming wedding season, where consumers are inclined to purchase jewellery for family weddings or as gifts for friends and relatives.
Additionally, the escalating gold prices have resulted in an uptick in jewellery demand, which saw a seven percent increase in the September quarter, rising from 146 tonnes to 156 tonnes. As the price of gold on LBMA has rallied from $1,928 an ounce to $2,230 an ounce, it has triggered a global rally in gold prices.
Furthermore, the Confederation of All India Traders anticipates that approximately 3.5 million weddings will be held till December-end, generating an estimated business of ₹4.25 lakh crore ($51 billion) this wedding season. This represents a significant increase from the 3.2 million weddings and ₹3.75 lakh crore in expenses recorded in the same period last year.
The rise in gold prices has also led to a trend of consumers exchanging old jewellery for new designs, especially during weddings. According to Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers, the surge in the gold price has resulted in over 35 percent growth in revenue in the first half of the December quarter.
With the expectation of a surge in demand lasting till February, despite temporary pauses in discretionary spending during phases of gold price volatility, it is evident that jewellery recycling will continue to play a significant role in the market. As the industry continues to adapt to the changing dynamics of gold prices, jewellery recycling presents itself as a viable and sustainable option for consumers. The trend of exchanging old jewellery for new designs also emphasizes the value of gold as an asset that can be used for wealth preservation and investment.
