Indians Increase Gold Purchases by 30% Amid Price Drop, Spending Rs 72,000 Crore on 52 Tonnes
Gold prices have seen a significant decline from their record highs, prompting a surge in purchases during the Dhanteras-Diwali period. According to the India Bullion and Jewellers Association (IBJA), gold demand increased by 30% in volume terms, while silver purchases rose by 10% compared to the same period last year. The association estimated that consumers bought 52 tonnes of gold worth Rs 72,000 crore and 300 tonnes of silver valued at Rs 5,400 crore during this festive season.
Gold Price Correction Fuels Demand
The uptick in gold purchases follows a price correction, with gold dropping from around Rs 1.8 lakh to Rs 1.42 lakh per 10 grams. This price drop has encouraged buyers to return to the market, particularly ahead of the wedding season, which begins in mid-November and lasts until March. IBJA national secretary Surendra Mehta noted that pent-up demand has emerged as many consumers had previously delayed purchases due to high prices and a call from Prime Minister Narendra Modi to refrain from buying gold.
Mehta remarked that the recent price decline, coupled with falling Brent crude prices, has motivated consumers to buy gold again. The timing of the festivals, with Dhanteras on November 6 and Diwali on November 8, coincided with when salaried employees typically receive their monthly pay and bonuses, further boosting cash flow in the market. Rajesh Rokde, chairman of the All India Gem & Jewellery Domestic Council, stated that the lower gold prices over the past several months have improved purchasing sentiment.
Gold and Diamond Sales Performance
Despite a nearly 50% decline in gold sales volume in the current fiscal year through September, the festive season has shown resilience. The decline was attributed to higher prices, increased import duties, and the Prime Minister’s earlier appeal. However, during this year’s Dhanteras-Diwali period, gold sales volumes were the third-highest in a decade, even with prices approximately 10% higher than last year.
Gold has generated substantial returns over the past few years, with prices rising from around Rs 60,000 per 10 grams in 2023 to approximately Rs 1.42 lakh during the festive period. C Vinod Hayagriv, director of C Krishniah Chetty Jewellers, noted that consumer confidence in gold jewellery remains strong despite the price volatility. Additionally, natural diamonds have also performed well, achieving their second-highest sales volume in eight years, with a 250% increase in sales on Dhanteras and a 47% rise during Diwali.
