India finds a way to cash in on rising gold prices

Kolkata has seen a significant rise in old-gold-for-cash transactions, now accounting for around 20% of business in August, compared to just 5% a year ago, as Indians capitalize on rising gold prices and higher living costs. Gold prices have soared to over ₹1.6 lakh per 10 grams, increasing by 14% this month alone. Consumers are liquidating household gold to meet expenses and lock in gains, fearing the rally may not last indefinitely.

Big names like Kalyan Jewellers, Tanishq, and Joyalukkas have introduced or expanded cash-for-gold options since June, integrating a service previously seen in smaller or regional jewellers into the organized retail segment. This shift brings retailers another avenue to source recycled gold during record prices, potentially offsetting margin dilution from fresh gold purchases.

Industry experts suggest that consumers are increasingly understanding they can utilize their household gold to buy other things, and inflationary pressures are forcing some to liquidate a portion of their gold holdings. As gold prices hit record levels, consumer behavior is shifting; while some may postpone jewelry purchases, the value of existing household holdings has increased, making them more attractive as a source of liquidity.

Jewellers report a surge in cash transactions, particularly among those keen to capitalize on the current prices before they potentially decline. Footfall has surged in the past few days, with consumers eager to take advantage of the present rates if the rally does not persist. Internationally, gold and silver prices dropped on Tuesday after reaching their highest levels in over three months, as traders monitored upcoming US inflation data and a speech from Federal Reserve Chair Kevin Warsh.

The Fed has yet to signal a tougher stance on inflation, and concerns over dollar debasement are likely to keep gold prices supported in the coming weeks.