Last Updated :
10 October 2009 at 19:30 IST
Gold set for new record on India religious festival
MUMBAI (Commodity Online): Diwali is round the corner (October 17) and the whole world is now looking at India’s bullion market to get a feel of the prices movement of the yellow metal.
Because, Diwali time almost all Indians buy some gold as they believe that it is auspicious to purchase gold on Diwali. And as expected India is nearing its peak gold sales season just as world bullion prices reach their highest ever.
The biggest gold-buying day of the year, Dhanteras, falls on October 15, when purchasing gold is believed to invoke prosperity for all Indians.
Two days later the festival of lights, Diwali, will also see heavy sales as people worship the Hindu goddess of wealth, Lakshmi, in India.
But the high prices nearing the psychologically important level of Rs 16,000 per 10 gm, have tempered sentiment this year.
ICICI Bank, the third largest importer, said gold imports may be around 500 to 550 tonnes this year, compared with 712.6 tonnes in 2008.
India’s gold demand has shrunk owing to volatile prices this year. On February 20, gold in the local market touched Rs 16,040 per 10 gm. Also, high inflation in late 2008, the global economic turmoil and a weaker monsoon season that affected crops, curtailed people’s appetite for gold.
Gold sales are the highest in the August to October festival season in India. People’s spending power gets a boost from company bonuses and the summer-sown crop’s harvest in October in India.
Marriages are generally held throughout the year but some auspicious days see a flood of weddings where the metal forms an important part of the bride’s trousseau. Lesser gold buying occurs from April to June in India.
Although the busy season will be over after Diwali, weddings scheduled until December are expected to see gold sales continuing in India’s bullion markets.
Industry experts believe if prices soften from current levels next year, at best, India’s demand would go back to normal, which means it may import about 700 tonnes of gold. But this may not show in the first half of the year due to the effects of poor monsoon rains this year and also because the first half has fewer festivals and a smaller harvest.
Gold is facing intense competition from lifestyle goods such as mobile phones and consumer durables.
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