As gold prices soar to record highs, jewellers across Asia and the Middle East are witnessing a growing trend of customers selling off old jewellery and coins, leading to a noticeable decline in demand for new pieces. If this selling spree persists, experts warn that it could slow down imports into key markets, potentially dampening the ongoing rally in gold prices.

Spot gold hit $3,000 per ounce for the first time on March 14, continuing to climb last week, marking an impressive 15% increase year-to-date, driven by global political and financial uncertainty. The price surge follows a nearly 30% jump in 2024, prompting a rise in business for scrap gold buyers in India’s Zaveri Bazaar, the country’s largest bullion market.

Unmesh Patel, a textile trader in India, recently earned a 25% return on four 10-gram gold coins purchased less than seven months ago, after the Indian government reduced import duties on gold. Patel chose to sell instead of waiting for prices to rise even further. Domestic gold prices in India have risen over 32% since the import duty reduction, reaching a record high of 89,796 rupees per 10 grams.

According to Prithviraj Kothari, president of the India Bullion and Jewellers Association (IBJA), if these high prices persist throughout the year, India’s overall gold demand could fall by more than 30% in 2025. With budgets stretched, buyers are increasingly unable to keep up with soaring prices.

Despite it being India’s wedding season, jewellers are seeing significantly reduced foot traffic, with many customers opting to exchange old jewellery for new in order to manage costs. India’s scrap gold supply, which totaled 114.3 tons last year, is expected to rise in 2025, further reflecting these changes in consumer behavior.

Similar trends are evident in the Middle East. In Dubai, a key jewellery hub, a decline in demand is being noted, with many Indian tourists opting to hold off on purchases, despite the appeal of avoiding import taxes. In the UAE, where 60% of gold demand is for jewellery, consumers are gravitating toward lower-weight products in response to high prices.

China, the world’s largest gold consumer, is also seeing a dip in retail gold purchases, with many buyers turning to coins and bars rather than paying premiums for crafted jewellery. Other major Asian markets are experiencing the same shift toward selling existing gold or using it as loan collateral.

These market dynamics reflect a delicate balance between gold’s cultural significance as a commodity and its growing role as a financial asset. Looking forward, experts predict continued strong demand for gold bullion, but the outlook for jewellery sales remains uncertain.