Athira Sethu,
Kochi, 1 Sep 2026
Prices of gold have shot up in India, however, Indian consumers have not sold off their old gold. This happens because when the price of an asset increases, people usually sell that asset. However, gold is an exception since Indian consumers have long valued gold as a means of accumulating wealth.
The amount of gold recycled in India during the April to June quarter of 2026 stood at 19.2 tonnes. It was less than 31.2 tonnes recycled in the previous quarter and also less than the 23.1 tonnes recycled in the corresponding quarter of 2025.
Recycling of gold involves selling the old gold in exchange for cash, and the gold thus obtained is refined and recycled to manufacture jewelry, coins, and bars. However, if one exchanges their old jewelry for new jewelry, it is not considered gold recycling. Similarly, gold used as security to obtain a loan is not considered recycling since the consumer continues to own the gold.
Around 92.6 tonnes of gold was recycled in India in 2025, whereas 114.3 tonnes of gold was recycled in the preceding year. However, this reduction in gold recycling is somewhat surprising since the prices of gold were increasing continuously.
Gold loans represent a major reason for this trend. Consumers no longer need to sell their gold since it can be used as collateral for borrowing money. Thus, they manage to obtain cash even though they continue to retain their gold. As the gold prices increase, the value of the gold used as security also increases.
Loans against gold have been experiencing rapid growth in India. According to data as at the end of May 2026, retail gold loans stood at ₹5.1 lakh crore whereas loans against gold from NBFCs stood at ₹3.3 lakh crore. This means that gold has become a major source of funding for Indian households.
The third factor driving this behavior is the popularity of exchange schemes. Households often give old jewelry to the jeweler and then redeem it through exchanging it with new jewelry, which allows them to get new designs but at the same time avoid selling the entire gold piece for cash.
However, selling the old jewelry might lead to loss of the money that was put into making charges and GST. Indeed, when selling jewelry, buyers are mostly paying for the weight and purity of the gold rather than design and making charges, which are relatively low in terms of monetary value.
In addition, gold is of high importance for India’s economy since the country relies on import of gold to a large extent. During April-June 2026, 82% of gold was imported and 16% was recycled in India.
Therefore, it can be concluded that for Indians gold is not an asset that should be sold when its price goes up but rather wealth, security, and emergency funds.
