Gold & Silver

Old for new gold, is the wedding mantra

Latha Venkatraman Mumbai | Updated on December 08, 2011 Published on December 08, 2011


There has been a significant increase in the sale of gold coins and recycling of old gold jewellery, as the yellow metal's price remains volatile and at historic highs, an industry official said.

“Consumers are buying coins and we have a 30-40 per cent increase in sales,” said Mr Dinesh Jain, Member, Governing Board of Director, All India Gems and Jewellery Trade Federation.

Consumers are recycling old gold jewellery when buying for the wedding season, said Mr Jain, who is also the managing director of P.M. Shah & Co jewellers. “There has been a 50 per cent rise in recycled gold in recent months,” Mr Jain said, attributing this to wedding purchases among lower-middle and middle-class consumers.

“With such high rates, it is not possible for families to go in for new gold jewellery entirely,” he said.

Moreover, high inflation has eaten into household budgets for gold jewellery purchases, he said.

World Gold Council had reported that inflation had impacted discretionary spending, leading to a fall in gold demand in India during the July-September quarter.

More sparkle in small centres

But compared to urban centres, the demand for gold jewellery is better in semi-urban and rural areas, mainly because people have surplus funds there, Mr Jain said.

Impact of slowdown

Gold touched record high prices several times this year, mainly brought on by the global economic slowdown. On September 6, it hit a historic high of $1,920 per ounce on international markets. In India, the rupee's depreciation against the dollar drove gold to new highs, touching a record Rs 29,500 per 10 gram mid-November in Delhi spot market.

Although jewellery outlets continue to buzz with customers, the action is mostly in recycling old jewellery and purchase of coins.

Some families even made wedding purchases way ahead, during July and August.

Coins for jewellery

Many who buy gold coins melt them later for jewellery making. At Zaveri Bazaar, Mumbai's gold jewellery and bullion hub, jewellers are offering customers the option of buying gold coins for later use in jewellery.

“But this trend is impacting our bottomline, as there is no premium in coins,” said Mr Jain. Also, the drop in jewellery sales has slowed down work at the manufacturing units. Mr Sanjay Kothari, vice-chairman, Gem and Jewellery Export Promotion Council, cautions that this would impact employment in the industry.

Not all jewellers, however, see a sharp increase in recycling of gold jewellery. “Recycling is at normal level,” said Mr Vinod Hayagriv, former chairman of All India Gems and Jewellery Trade Federation and managing director of Bangalore-based C. Krishniah Chetty & Sons Jewellers

Value-added products

Some jewellers are offering value-added products to counter the drop in sales and retain profits.

“Jewellers are adding value by offering pieces with coloured gemstones or fashion jewellery,” Mr Jain said.

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Published on December 08, 2011
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