Old-gold-for-cash transactions have increased sharply as gold prices reach record levels, with such deals accounting for around 20% of jewellery business in August so far, compared with about 5% a year earlier, according to the reported industry data.

Gold prices crossed INR 1.6 lakh per 10 grams during the month and had risen 14% in August at the time of the report. Gold was trading at around INR 1.62 lakh per 10 grams in Mumbai’s spot market on August 25.

Consumers are increasingly choosing to liquidate household gold to meet rising expenses or lock in gains following the price rally. The trend is also shifting cash-for-gold transactions from a service largely associated with smaller jewellers into organised jewellery retail.

Kalyan Jewellers and Tanishq have introduced or expanded cash-for-gold options since June, while Joyalukkas also offers the facility. Under the model, customers sell old jewellery for cash rather than exchange it against a new purchase.

“Cash for gold is really catching up, and it should ideally negate the margin dilution, which happens due to the exchange,” said Ramesh Kalyanaraman, executive director, Kalyan Jewellers. The company said its cash-for-gold share moved into double digits in the June quarter from single digits previously.

Gold trade analyst Bhargav Vaidya said consumers are increasingly recognising that household gold can be used to fund other purchases, with inflationary pressure also encouraging liquidation.

At Jos Alukkas, managing director Varghese Alukkas said footfall had increased as consumers sought to take advantage of current gold prices