This year, during Diwali, the festival of lights and one of the most important religious holidays for Hindus, Indians spent between $8 and $11 billion on gold. Moreover, they preferred gold bars and coins over traditional jewelry.
On the first day alone of the festival, which typically lasts five days (this year it ran from October 19 to 23), more than 40 tons of gold were sold in India, according to leading Indian gem and jewelry trade organizations. Experts note that the purchases are driven by investment rather than consumption reasons.
According to Surendra Mehta, National Secretary of the India Bullion and Jewellers Association (IBJA), just a few years ago, only one in ten buyers chose a coin or gold bar, but now the situation has changed. Compared to last year, jewelry sales this festive season fell by approximately 30%, he noted.
Indians' investment enthusiasm for gold is driven by the search for yield. This year, the price of gold rose 66% by mid-October, before plummeting. Earlier this month, gold prices exceeded $4,000 per ounce, and some industry experts predict the price of the yellow metal will reach $5,000 in 2026.
According to the World Gold Council, India is the second-largest buyer of gold after China. The country has been a stable buyer for many years, fueled by traditional gold demand during the festive (October) and wedding seasons (October to mid-January and April to May).
As global central banks increase gold purchases, driving up prices, the precious metal is increasingly attracting retail investors who fear missing out on the boom. According to experts, the sharp rise in gold prices is prompting Indians to view it not only as a consumer good but also as a key investment asset. Despite significantly higher prices, sales volume over the five days of Diwali this year were only 5% lower than last year.
Overall, Indian household wealth held in gold is estimated at $3.8 trillion (88.8% of GDP). And experts predict that gold's rally will likely continue.
Hélène Tarin, Editor-in-Chief of the Asian Bureau, Rough&Polished
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