In all their dealings and transactions Muslims should be mindful of Allah and pay heed to His commands. We should never violate the teachings of Shari`ah under any circumstances. As far as Islam is concerned, it is not permissible to exchange old gold for new even if the difference in value is paid to the goldsmith. If someone wants to get new gold, the best way is to sell the old gold and take the price and then buy new gold with it.
Shedding more light on the issue referred to, here is the fatwa of the well-known Muslim scholar, the late Sheikh Muhammad ibn `Uthaymeen, a prominent Saudi Muslim scholar and lecturer: “It is not permissible to exchange worn-out gold for new gold and pay the difference. This is indicated in the story of Bilal (may Allah be pleased with him), who brought some good dates to the Prophet (peace and blessings be upon him) and he said to him: “Where did these come from?” Bilal answered: “We had some bad dates and I paid two saa` (2.03 kilos) of them for a saa` so that the Prophet (peace and blessings be upon him) might have some.” The Messenger of Allah (peace and blessings be upon him) said: “Oh! Do not do that. (It is) the essence of riba (usury).” (Al-Bukhari)
The Prophet (peace and blessings be upon him) stated that giving more when equal amounts are exchanged because of the difference in quality, is the essence of riba, and this is not permissible. However, the Messenger of Allah (peace and blessings be upon him), as was his habit, pointed out the permissible way. The Prophet (peace and blessings be upon him) told him to sell the bad dates for cash money and then buy the good dates with that money.
Based on this we say: If a woman has some worn-out gold or gold that people no longer wear, she can sell it in the market and take the money, and then buy new gold of her choosing. This is the way taught by our Prophet (peace and blessings be upon him).”