The domestic gold demand at Dhanteras changed little from last year as higher prices limited purchases, market participants said. Sales were almost the same as 2022 amid high prices.
Dhanteras marks the beginning of Diwali and is seen as an auspicious occasion to buy precious metals, utensils, and other valuables. Gold dealers said lightweight jewellery, bangles, and plates were the goods sold most this year, but 97% of sales involve recycling gold.
“Most people are exchanging gold ornaments to purchase new ones,” said Kumar Jain, national spokesperson for the India Bullion and Jewellers Association.
“There are few credit card, online and cash transactions this year.” Jewellers said prices will remain high even after Dhanteras owing to geopolitical tensions.
“(This) Dhanteras, I expect 40 tonnes of gold to be sold,” said Surendra Mehta, national secretary, India Bullion and Jewellers Association. At Dhanteras last year, sales of gold stood at 39 tonnes, he said.
Demand For Gold In India Rose From Jul-Sep
According to the World Gold Council, demand for the metal in India rose 10% on year to 210.2 tonee in Jul-Sep. In value terms, however, Jul-Sep demand rose 28% on year to Rs 1.88 trillion, from Rs 1.47 trillion last year.
In October, Somasundaram PR, WGC’s India regional chief executive officer, said in a report that gold demand in India may get the usual boost from festivals and wedding purchases in Oct-Dec, but any sharp price rise could delay the release of pent-up demand after a relatively weak Jan-Jun.
Somasundaram also said consumers have largely reconciled themselves to the ruling price baseline of Rs60,000 for 10gm. Pure gold in the Mumbai spot market opened at Rs60,445 per 10gm on Friday, while standard gold opened at Rs60,203 per 10gm, according to the India Bullion and Jewellers Association.
Some analysts, however, see reduced demand for gold this Diwali as erratic weather conditions weigh on crop output. Rural India accounts for more than 60% of the country’s gold demand.
Kharif output is seen to have been affected by erratic weather conditions earlier this year. Rabi output is also likely to be lower, which may lead to reduced rural demand, said Sriram Iyer, senior research analyst at Reliance Securities. “This Dhanteras, there will be a slight increase from last year’s sales as prices are very high,” Iyer said. He expects demand for “loweryielding metals” like gold to rise next year amid high inflation and interest rates.