Indians will probably sell a record amount of used gold jewelry this year to take advantage of a surge in domestic prices of the precious metal, according to the World Gold Council.

If local prices continue to rise, recycled bullion sales are expected to jump more than 20% and match the previous high of 119.5 tons set in 2019, P.R. Somasundaram, regional chief executive officer for India at the World Gold Council, said in an interview. That’s likely to see India importing less gold this year, he said from Mumbai.

A cut in purchases by the world’s second-biggest gold importer could put some downward pressure on international prices, currently near $1,960 an ounce. Indian gold prices have jumped by almost a fifth over the last 12 months, more than twice as much as globally, due to a weakening rupee making the precious metal more expensive.

Gold is a popular investment in India, especially in rural areas where it can be difficult to access banking services. Farmers often buy the metal after a good harvest and will then sell it, if needed, to buy seeds, fertilizer and other items. Indian households and temples collectively hold about 25,000 tons of gold.

A poor monsoon this year could further increase sales of used gold, but it’s too early to say as the rainy season has just started, Somasundaram said.

Read More: Monsoon Finally Arrives in India After Longest Delay Since 2019

Indian recycled gold sales, defined as bullion or jewelry sold for cash, jumped by a quarter in the the first three months of 2023 from a year earlier to about 35 tons, council data show. Purchases of bullion fell by 17% to 112.5 tons over the period.

“Historically, for every 100 grams of gold we transacted, generally 25% was old jewelry sales,” said Ashish Pethe, former chairman of the All India Gem and Jewellery Domestic Council. The percentage may reach 35% to 40% this year as prices are rising, he said.

--With assistance from Jason Scott.