India’s Gold Demand Rises as Diwali Buying Coincides with Price Drop

Gold demand in India witnessed a significant increase on Friday as the Diwali festive season began, with prices falling to a seven-month low and attracting buyers who had been waiting for a correction. The decline encouraged customers to return to jewellery showrooms, particularly on Dhanteras, an auspicious occasion traditionally associated with purchasing gold. Industry representatives expect this year’s Dhanteras sales to increase by around 10% compared with last year.

Domestic gold prices were trading at approximately ₹1,41,800 per 10 grams on Friday, after dropping to ₹1,37,863 earlier in the week, the lowest level since March 24. Prices had previously reached a record high of ₹1,80,779 earlier this year. Jewellers reported increased interest from bargain hunters, while many retail customers continued to favour gold coins and bars as investment options due to the metal’s strong returns over the past year. Higher gold imports could also widen India’s trade deficit and put additional pressure on the rupee.

However, demand from rural areas remained relatively weak as drought conditions affected farmers’ incomes and purchasing power. India’s monsoon rainfall was nearly 13% below normal this year due to severe El Niño conditions, marking the lowest rainfall in more than a decade and affecting crop production. Despite rural market challenges, the combination of lower gold prices and festive sentiment provided a boost to jewellery retailers across the country.

Pic courtesy: google/ images are subject to copyright