Gold, silver price surge stokes industry job fears

Manufacturers brace for higher costs, and artisans face an uncertain future

Mumbai: Amid a sharp rise in gold and silver prices, a steep increase in the prices of base metals such as copper, brass and aluminium has compounded the crisis for Indian manufacturing and artisanal industries. With copper prices jumping by nearly 40 per cent over the past year, and brass and aluminium rising by around 20 per cent and 16 per cent respectively, industry players fear severe cost pressures and potential job losses across sectors dependent on these metals.

Global geopolitical instability, interest rate cuts by the US Federal Reserve and a sharp depreciation of the rupee against the dollar have driven precious metal prices to record highs in India. While the impact on the gold and silver jewellery industry is already visible, the simultaneous surge in base metal prices has widened the distress to a much larger segment of the economy.

Silver prices in India have crossed Rs 2 lakh per kilogram, registering a year-on-year rise of 149 per cent, while gold has surged nearly 70 per cent to breach Rs 1.30 lakh per 10 grams for 24-carat gold. In international markets, gold prices have crossed $4,500 an ounce. With prices moving beyond the reach of ordinary consumers, demand for traditional jewellery has weakened, even during the festive season, forcing buyers to opt for lower-carat products or reduce overall spending.

However, the sharper concern for industry has come from base metals. Compared to December last year, copper prices have risen by around 40 per cent, brass by 20 per cent and aluminium by 16 per cent, triggering alarm among traders and manufacturers. In India’s commodity futures market, copper has emerged as one of the most profitable metals for investors after gold and silver.

Rising demand from electric vehicles and renewable energy projects has significantly pushed up the consumption of copper and aluminium. Supply-side disruptions have further aggravated the situation. Accidents in copper mines in Chile, production declines in other major supplying countries, and global sanctions on Russia affecting aluminium supply have tightened availability. In addition, higher energy and capital costs have pushed up aluminium production expenses, contributing to price escalation.

Traders point out that record copper prices have also led to a spike in demand for brass utensils ahead of the festive season, with brass prices now touching Rs 1,600 per kg.

India’s scrap metal market, traditionally considered a sellers’ market, is witnessing unprecedented demand. Industry estimates suggest that scrap metal demand could reach 65 million tonnes by 2030, potentially forcing India to rely heavily on imports to bridge the gap.

Near Stagnation

Meanwhile, record-high gold and silver prices have brought near stagnation in domestic jewellery markets. While investment demand for gold remains relatively strong, purchases of traditional ornaments have fallen sharply. The gold and silver jewellery industry employs around 8 million people directly, with over 300,000 small and large retail outlets operating across the country. Including ancillary workers, several crore families depend on this sector for their livelihood.

Industry representatives warn that continuous price volatility has pushed workers into a wait-and-watch mode, with production slowing significantly. Hupari in Kolhapur district, one of the country’s largest silver jewellery hubs, employs thousands of artisans. In nearly 40 surrounding villages, silver items are produced at the household level. Currently, work there has dropped to less than 20 per cent of installed capacity, raising fears of widespread unemployment if the price spiral continues.