India’s gold market is being reshaped by record-high prices and import costs, with households increasingly pulling jewelry out of lockers and recycling old pieces instead of buying fresh gold this festive season.
India Gold Imports Fall as Recycling Rises
That shift matters because India is the world’s second-largest consumer of gold after China, and a pullback in new imports reduces pressure on the trade deficit and the rupee even as global bullion remains expensive. It also shows how price-sensitive demand has become in a market that normally lifts imports sharply during the autumn festival and wedding period.
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Gold imports fell to $2.3 billion in August, down 45% from the prior month and 58% from a year earlier, according to the data cited in the report. Volumes were just 15 to 20 tonnes, and gold’s share of India’s total merchandise imports slid to 3% from 9% a year earlier.
The restraint is being driven less by a collapse in demand than by substitution. Instead of buying new jewelry, consumers are swapping in old gold for new designs, a trade that large organized jewelers say now accounts for a growing share of sales.
CRISIL said more than 40% of revenue at leading organized retailers in the first quarter of fiscal 2027 came from old and recycled gold. Joy Alukkas said 73% of the company’s August sales came from exchange transactions, up from 57% a year earlier, a 16 percentage-point jump that underscores how central recycling has become.
Domestic pricing has also made the conversion trade more attractive. Average Indian gold prices in September were 151,346 rupees per 10 grams, 3.6% above January and only 2% below the May record, while international prices averaged $4,324.7 an ounce, 8.8% lower than January and well off a February peak of $5,019.5.
Even with bullion off its highs globally, Indian buyers are still facing a heavier landed cost after import duty was raised to 15% from 6% in May, lifting costs by about 8.5%, while the rupee has weakened by about 8%. That combination has kept the benefit of lower global prices from fully reaching consumers.
For investors, the story points to softer physical demand for imported gold, a possible cushion for India’s current account, and stronger pricing power for jewellers that can profit from exchange and recycling flows rather than relying only on new purchases. It also suggests bullion demand may remain resilient, but increasingly in recycled form.
The key question heading into the rest of the festive season is whether high prices keep suppressing fresh buying or whether wedding demand forces a rebound in imports, a call that will matter for gold traders, Indian retailers and the rupee alike.
| Entity | Gains | Losses |
|---|---|---|
| Organized jewellers | ▲More exchange-led sales | ▼Lower fresh gold demand |
| Indian households | ▲Can monetize old gold | ▼Face higher jewelry costs |
| India’s trade balance | ▲Less import pressure | ▼Weaker consumption of new bullion |
| Gold importers | ▲Recycled supply growth | ▼New-import volumes |
