Rising gold prices spark record jewellery exchanges this festive season: Report

Government and industry estimates indicate that Indian households collectively hold around 22,000 tonnes of idle gold

The sharp rally in gold prices has prompted consumers to trade in old household jewellery for new this festive season, driving the share of gold exchanges in total sales to record levels during the Navratri-to-Dhanteras period, according to a report by The Economic Times.

For Tata-owned Tanishq, exchanges are expected to account for nearly half of total sales value on Dhanteras this year, compared with about 35% a year ago, ET reported. Reliance Retail told analysts that roughly one-third of its gold jewellery sales now come through exchanges, up from 22% last year, while Senco Gold said the share has risen to 45% from 35%.

Reliance Retail chief financial officer Dinesh Taluja told ET that consumers are opting to recycle gold rather than invest in fresh purchases due to the steep rise in prices. "Average bill values are up substantially because of the price increase. However, volumes have declined across the industry as purchasing power has been affected by the surge in gold prices," he said. "As prices stabilise, volumes should also pick up."

According to ET, gold prices touched Rs 1.34 lakh per 10 grams, inclusive of 3% GST, on Dhanteras (October 18)-one of India's most auspicious days to buy precious metals-marking a 69% jump from Rs 80,469 recorded on the same day last year. Government and industry estimates indicate that Indian households collectively hold around 22,000 tonnes of idle gold, and the recent price rally is prompting many to exchange old family ornaments for new designs.

To attract these customers, Tanishq introduced a zero price-deduction programme on gold exchanges across all caratages during the festive season, ET noted. During Navratri, the contribution of old gold exchanges to Tanishq's total sales stood at 38-40%, chief executive officer Ajoy Chawla said in an interview with ET before Dhanteras. "We expect this number to reach about 50% of total sales by the end of Diwali," he added.

Tanishq has not shared final Diwali figures, as its parent company Titan is in a silent period ahead of quarterly results. In a regulatory filing earlier this month, Titan said its domestic jewellery business grew 19% year-on-year in the July-September quarter, with higher prices offsetting a marginal decline in buyer numbers. The company said consumer promotions and gold exchange schemes helped drive festive demand.

Jewellers told ET that the spike in exchanges was concentrated in western, northern, and eastern India, while southern consumers largely continued to buy new gold instead of exchanging. India consumes around 800-850 tonnes of gold annually, with the southern region accounting for about 40% of that demand.

Kalyan Jewellers executive director Ramesh Kalyanaraman told ET that festive buying and old gold exchanges were mainly driven by non-southern markets. For the Kerala-headquartered retailer, markets outside the South now contribute roughly 30% of sales. He added that there was also strong demand for gold and silver coins during the Dhanteras-Diwali period, with supply shortages in a few areas.

For Kolkata-based Senco Gold, exchanges surged significantly this Dhanteras. "Consumers have been buying both bridal jewellery and personal ornaments through old gold exchanges," managing director Suvankar Sen told ET.

Meanwhile, a decline in gold prices this week has brought relief to jewellers, who expect stronger wedding-season sales and a lift in overall consumption. On Friday evening, gold was trading at around Rs 1.26 lakh per 10 grams (including GST), down more than Rs 7,900 from Dhanteras levels, ET reported.

"After an extraordinary run, the market needed a pause-a moment to catch its breath-and that's exactly what we're seeing now," Nigel Green, CEO of global financial advisory firm DeVere Group, told ET.