India’s gold imports for 2024 are expected to drop by around 20% compared to the previous year due to soaring prices, according to Prithviraj Kothari, head of the India Bullion and Jewellers Association (IBJA).
The surge in prices has led retail consumers to opt for exchanging old jewellery for new pieces, as revealed by Kothari. Vinayak Patil, preparing for his daughter’s wedding, exchanged 50 grams of old jewellery for new ornaments this month due to the financial constraints posed by the high prices. He cited the cost of new jewellery, which amounted to 475,000 rupees after including making charges and taxes, as unaffordable.
The option to exchange old jewellery for new ones, paying only the making charges and taxes, has become more appealing to buyers like Patil. The recycled old jewellery, known as scrap supplies, is utilized in jewellery making.
Data from the World Gold Council showed a 10% increase in scrap supplies in the March quarter compared to the previous year, reaching 38.3 tons. Kothari predicts a 20% reduction in imports from the previous year due to decreased demand caused by high prices and increased scrap supplies.
In 2023, India imported 744 metric tons of gold. Domestic prices for gold hit a record high of 74,442 rupees for 10 grams this week, marking a 17% increase since the beginning of 2024, following a 15% rise in 2023.
Amit Modak, CEO of PN Gadgil and Sons, noted that rising gold prices are impacting jewellery demand more significantly than investment demand. He highlighted that the proportion of exchanges in jewellery purchases has risen to 60% from about 40% the previous year.
Jewellery purchases constitute three-quarters of the total demand, with investment demand comprising the remainder. Ashok Jain, proprietor of Mumbai-based gold wholesaler Chenaji Narsinghji, mentioned that while investment demand was strong earlier this year, record prices are now prompting some investors to sell their holdings and secure profits.