Diwali Festival Boosts India’s Gold Demand, But Higher Prices Weigh
(Kitco News) - Gold demand picked up in India this week, as consumers were buying more gold during the Diwali festival, but higher prices kept a cap on purchases.
Despite more activity, demand was still lower than last year, Reuters quoted Nitin Khandelwal, chairman of All Indian Gems & Jewellery Trade Federation, as saying.
“In some regions, demand was nearly 30 percent lower than normal, but in others, it was on par compared to last year. Overall for the country, demand was down around 15 percent,” Khandelwal said.
Diwali festival is known for gold buying in India. It celebrates victory of light over darkness and comes right before India’s wedding season, so it is considered a lucky time to buy gold.
But, higher gold prices kept some people away this season, according to one jeweler. “Consumers were price sensitive and buying less gold than last year. They had a very tight budget,” said Mangesh Devi.
The yellow metal rose almost 8% in India since the start of 2017.
During the Asian open on Friday, gold on Kitco.com was seen trading at $1,284.90, down 0.37% on the day.
“This year, my husband's business is down due to GST (Goods and Services Tax). That's why I reduced spending on gold,” said Sangeeta Pardesi.
Those looking to buy the precious metal for a cheaper price headed to Dubai this year, media reports said.
Some jewelers in Dubai reported at least at 20% rise in sales ahead of the wedding season in India, as buyers ripped the benefits of various tax breaks, according to CNN.
Indians can export a certain amount of gold duty free from Dubai. The amounts are 1.4 ounces for women and 0.88 ounces for men.
“Dubai will always be something like 6-9% cheaper than Indian jewelers when it comes to (gold),” Gaurang Desai, CEO of the Dubai Gold and Commodities Exchange (DGCX) told CNN.