Gold Prices Hit The Roof, But Demand Weakens As Consumers Become Sellers Across Major Markets
The influx of sellers, if sustained, could result in a decline in gold imports in key markets, potentially slowing the metal’s price surge, according to industry experts.
With gold prices consistently touching the sky, jewellery sellers in Asia and the Middle East are witnessing a rush of customers eager to cash in on their old gold assets.
The influx of sellers, if sustained, could result in a decline in gold imports in key markets, potentially slowing the metal’s price surge, according to industry experts, reported Reuters.
Spot gold crossed the $3,000 per ounce mark for the first time on March 14, continuing an upward trend that saw its value rise over 15 per cent this year alone, the report said. This follows an almost 30 per cent increase in 2024. The soaring prices fueled an uptick in trade at Zaveri Bazaar, India’s largest bullion hub, where scrap gold buyers capitalised on the heightened activity.
India’s domestic gold prices have surged more than 32 per cent since the import duty reduction in July, reaching a record high of Rs 89,796 per 10 grams. Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA), predicted that if prices remain elevated, India’s gold demand could fall by over 30 per cent in 2025.
Quoting him, the news agency reported, "Buyers are finding it hard to keep up with the price surge, and their budgets aren't growing either."
Wedding Season Fails to Boost Jewellery Demand
Despite the ongoing wedding season in India, jewellers reported a significant decline in customer traffic, with footfall dropping to less than half the usual levels. Many shoppers are choosing to exchange old jewellery instead of making fresh purchases, the media organisation found.
India’s scrap gold supply totalled 114.3 tons last year, and the World Gold Council expects this number to rise in 2025. India primarily relies on imports to meet its gold demand, while China, the world’s largest consumer, imports two-thirds of its gold requirement.
Global Jewellery Sales Decline Amid High Prices
A similar trend was observed in the Middle East, where jewellery sales slowed considerably. A Dubai-based bullion dealer noted that Indian tourists, who usually shop in Dubai to avoid import taxes, were also holding back on purchases.
Andrew Naylor, Head of Middle East and Public Policy at the World Gold Council, pointed out that around 60 per cent of gold demand in the UAE comes from jewellery. However, as prices climbed, consumers have shifted to buying lighter-weight pieces.
"Our data shows that the value of jewellery bought last year increased, despite lower volumes," he said.
In China, demand for jewellery remained weak, with many consumers opting for gold coins and bars instead of crafted pieces due to additional premiums on craftsmanship. Other Asian markets followed a similar pattern, with sellers outnumbering buyers. In Singapore, consumers leaned towards liquidating existing gold rather than investing in new jewellery.
Brian Lan, managing director at GoldSilver Central, highlighted an increase in shops selling gold-plated silver in Singapore’s Chinatown.
"We have seen some clients who go home and look for jewellery that they don't wear, or is broken, and bring it back to liquidate it," he added.
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