The surge in gold prices is prompting a growing number of Indians to consider recycling their gold jewellery as demand intensifies during the peak wedding season in the country, the largest consumer of the precious metal after China.
Surendra Mehta, National Secretary at the India Bullion and Jewellers Association Ltd., notes that the rising gold prices are encouraging more Indians to exchange their existing gold jewellery for new pieces. While consumers are making purchases for wedding-related needs, they are otherwise showing a cautious approach in the market due to the elevated prices and the anticipation of a rate cut by the Federal Reserve early next year.
Spot gold reached a record high on Monday, experiencing a surge of over 10% since early October. This increase is fueled by speculation that the Federal Reserve will implement rate cuts in the near future. The depreciation of the rupee further compounds the situation, making bullion even more expensive in India, a country heavily reliant on gold imports.
Ashish Pethe, a partner at Waman Hari Pethe Jewellers, acknowledges that wedding purchases are inevitable, even with the current price levels. Gold prices have been hovering around Rs 60,000 for 10 grams, prompting some consumers to adjust their buying patterns by opting to exchange old jewellery for new pieces.
In Indian culture, wearing and gifting gold is considered auspicious during weddings, leading to significant spending on jewellery. The peak wedding season typically spans from November to February.
India, with households and temples collectively holding about 25,000 tons of gold, imported 220 tons of the precious metal in the July-September quarter, marking a 19% increase compared to the same period the previous year. As gold prices continue to exert pressure on imports, the trend of recycling jewellery for weddings is likely to persist in the coming months.
