India now the fourth largest gold recycling country : World Gold Council

 

India has emerged as the fourth largest gold recycling country in 2021, recycling 75 tons, or 6.5 per cent of the total gold recycled across the globe, said a report by the World Council (WGC). Over the past five years, 11 per cent of India's gold supply came from 'old gold'; driven by movements in the gold price, future gold price expectations and a wider economic outlook. It is driven by price movements of the yellow metal - current and future expectations, and the economic backdrop.

 When the gold price jumps people tend to sell their gold holdings either to gain from the price rise or to avoid spending on new gold jewelry. The reperch Focus found that the percentage of consumers exchanging old jewelry increases when price rises, and when the economy is under stress – as we saw during Covid-19 – gold is sold to meet everyday needs.

 In the short run, a 1 per cent increase in the price of gold pushes recycling up by 0.6 per cent. Conversely, positive GDP growth in the same year and the previous was down by 0.3 per cent and 0.6 per cent, respectively. In addition, a 1 per cent increase in jewelry demand pushes recycling down by 0.1 per cent.

 Over the years, India's organized gold refining capacity, too, has seen a significant jump - from barely 300 tons in 2013 to around  1,800 tons in  2021. 

 India, according to Somasundaram PR, Regional CEO, India, WGC has the potential to emerge as a competitive refining hub if the next phase of bullion market reforms promotes responsible sourcing, exports of bars and consistent supply of scrap

Domestic recycling market driven by economic cycle and by local rupee prices is less organized but can be attractive to surplus gold and liquidity with support from Gold Monetization Scheme(GMS). Higher income following economic growth will reduce outright selling and consumers find it easier to pledge than selling it. It is therefore necessary to support organized recycling with better  incentives and tech-based solutions encompassing the gold supply chain end-to-end.