India’s record-high gold prices have not translated into an increase in scrap supply, with households largely holding back from selling old jewellery and coins. According to a Reuters report, the expectation that bullion prices will continue rising is prompting many investors to retain their holdings rather than book profits.
This marks a contrast with March, when spot gold first breached $3,000 an ounce and retail investors rushed to sell, temporarily flooding the market with scrap. “Indians now believe gold prices will rise even higher, which is why they’re choosing to hold their assets instead of selling them for a profit,” James Jose, managing director of refiner CGR Metalloys, told Reuters on the sidelines of the India Gold Conference in New Delhi.
Local prices touched an all-time peak of 110,666 rupees ($1,260.94) per 10 grams earlier this week, up 42% year-to-date after a 21% gain in 2024. Ordinarily, such rapid climbs encourage sales of used jewellery, but sentiment has shifted. “Consumers now think prices could even touch 125,000 rupees, so they’re holding on to their gold instead of selling,” said Harshad Ajmera of wholesaler JJ Gold House in Kolkata, per the report.
While high prices have made new jewellery less affordable, jewellers are seeing more customers exchange old ornaments for new purchases. “Refiners are sourcing scrap from replaced jewellery to sustain operations,” Ajmera added, noting that imports of dore, the semi-pure alloy from miners, have dropped sharply.
According to the report, the shortfall in scrap supply ahead of the festive season has pushed jewellers to rely more on banks for bullion, as imports remain critical. With Dussehra and Diwali approaching in October, when gold buying is considered auspicious, banks are even charging a $1 premium at record prices, something typically offset by discounts during high-supply periods.
Government data highlighted that India’s gold imports in August rose 37% month-on-month to $5.4 billion, reflecting continued demand despite elevated costs.
