Surging gold prices are prompting some Indians to exchange gold jewelry for new pieces as demand rises during the wedding season in the biggest consumer of the precious metal after China.
More Indians are looking to reuse their gold, and the higher prices mean imports will remain pressured in the coming months, said Surendra Mehta, national secretary at the India Bullion and Jewellers Association Ltd. Consumers have been buying to meet wedding-related needs, but are otherwise largely staying away from the market, he said.
Spot gold jumped to a record high on Monday and has risen more than 10% since early October on speculation the Federal Reserve will cut rates early next year. A weakening rupee means bullion is even more expensive in India, which is totally reliant on imports.
“Wedding purchases are happening as they are inevitable,” said Ashish Pethe, a partner at Waman Hari Pethe Jewellers. Indian prices have been hovering around 60,000 rupees ($720) for 10 grams, and some consumers have been adjusting their purchases by exchanging old jewelry for new, he said.
Wearing and gifting gold is considered auspicious during weddings, and Indian spend heavily on jewelry. Most Indians tie the knot between November and February.
Indian households and temples collectively hold about 25,000 tons of the precious metal. The country imported 220 tons of gold in the July-September quarter, 19% more than a year earlier.
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