Sales of gold scrap in India, the world’s biggest buyer of the precious metal, have increased as record prices prompt housewives and other consumers to recycle more old jewellery, curbing demand for new supplies of bullion.
Gold price rose to a record on Monday, breaching $900 (Rs35,370) an ounce, extending its longest rally since at least the end of World War II. That’s curbed sales of jewellery and retailers are offering incentives to lure buyers, Ajay Mitra, managing director of the producer-funded World Gold Council in India, said in an interview.
“The market is being flooded with old jewellery,” said Daman Prakash Rathod, director at Chennai-based MNC Bullion Pvt. Ltd, the biggest bullion dealer in southern India. “There’s no dearth of families willing to take advantage of the record prices. They’re selling with the hope of buying later at lower rates,” he said.
Purchases by India in the three months ended December, the traditional peak consumption season, slumped 77% from a year earlier to 40 tonnes, the Bombay Bullion Association Ltd said last week.
“In Mumbai alone, we have seen purchases of old jewellery of 30-40kg a day,” Bombay Bullion president Suresh Hundia, said. “There have been zero imports in the past 15 days,” he added.
Consumers usually exchange as much as 125 tonnes of old jewellery, or about 16% of annual demand, for newer designs, Rajan Venkatesh, Mumbai-based director at Bank of Nova Scotia, a bullion supplier, said. There’s been a “significant increase” in scrap sales this year because prices have surged, he added.
Worldwide supply of gold from sale of old fabricated jewellery increased 11% reaching 262 tonnes in three months, according to the recent numbers by GFMS Ltd, a London-based researcher, which compiles data for the World Gold Council. High prices have also curbed purchases of gold bars and coins, the council’s Mitra said. Indians likely bought more than 200 tonnes last year for investment purposes, he said.