By RAJENDRA JADHAV AND ASHITHA SHIVAPRASAD
MUMBAI- As gold prices jump to successive highs, jewelers across Asia and the Middle East are grappling with displays losing their sparkle as customers race to cash in their old jewelry and coins.
If the rush to sell continues, it could ultimately lead to lower imports into major markets, potentially tempering gold’s rally, retailers and industry experts said.
Spot gold topped $3,000 an ounce for the first time on March 14, and continued climbing last week to bring year-to-date gains to more than 15 percent, driven by a powerful combination of political and financial uncertainty.
The stunning run higher follows an almost 30 percent rise in 2024, and has driven increased business for often-overlooked scrap gold buyers in Zaveri Bazaar, India’s largest bullion market.
Textile trader Unmesh Patel said he had made a return of more than 25 percent selling four 10-gram gold coins bought less than seven months ago after the Indian government cut import duties on the metal.
“I just decided to sell instead of waiting for prices to go up even more,” he said.
Domestic gold prices in India have risen more than 32 percent since it cut import duties in July, to a record high of 89,796 rupees per 10 grams.
“If prices stay this high all year, India’s overall demand could drop by more than 30 percent in 2025,” said Prithviraj Kothari, president of the India Bullion and Jewelers Association (IBJA).
“Buyers are finding it hard to keep up with the price surge, and their budgets aren’t growing either,” he added.
Although India’s wedding season is in full swing, jewelers are seeing less than half their typical customer traffic, according to dealers.
Even those who are making purchases, such as bride-to-be Vaishnavi M., are opting to exchange old jewelry for new to minimize costs.
“The rates are so high that it would completely mess with my wedding budget…the plan is to exchange some of my mother’s old jewelry,” said Vaishnavi M. in the southern state of Kerala.
India’s scrap gold supply totaled 114.3 tons last year, a figure the World Gold Council forecasts will increase in 2025.
India fulfils the majority of its gold requirement through imports, while China, the biggest consumer, also meets two-thirds of demand via imports.
Jewelry hubs in the Middle East are seeing a similar dip in demand, according to a Dubai-based bullion dealer.
“A lot of Indian tourists usually shop in Dubai to avoid import taxes, but even they’re holding back,” the dealer said.
