Diwali, the festival of lights in India, is not just the biggest and brightest festival of the year. It is also the time when gold and diamond sales increase tremendously in the country. In 2024, Diwali festivities will run from October 29 to November 3.
According to industry representatives, gold demand in India will be very strong during the upcoming festive season, as a significant reduction in import duties has made prices attractive to consumers.
Rising demand in India, the world's second-largest gold consumer, could help maintain high prices, which hit a record high last week. However, higher demand for gold imports could widen India's trade deficit and put pressure on the rupee.
"The primary beneficiaries of the reduced duty cut will be retail consumers," said Sachin Jain, director general of India operations at the World Gold Council (WGC). In July, India cut import duties on gold from 15% to 6% to curb smuggling.
Gold demand in India typically picks up towards the end of the year, coinciding with the traditional wedding season and major festivals including Diwali and Dussehra, when buying gold is considered auspicious.
Retail demand has improved after the duty cut pushed prices down, a trend that is likely to continue in the coming months, according to Titan’s jewellery chief executive Ajoy Chawla.
Global prices hit a record high last week, but domestic prices in India stood at around 71,800 rupees per 10 grams ($855.30) on Monday, below a record high of 74,731 rupees hit in July. The duty cut changed the mood of retail consumers who had been putting off purchases due to rising prices, said Asher O, Managing Director, India Operations, Malabar Gold and Diamonds.
He said gold prices could have hit a new record high of over 80,000 rupees had it not been for the duty cut, but are now trading below the peak, which is likely to boost demand ahead of the upcoming Onam festival in September.
Hélène Tarin, Editor-in-Chief of the Asian Bureau, Rough&Polished
