Despite gold prices hitting the roof, Indians are making beelines at leading retail stores to purchase yellow metal in the festive season ahead of Diwali
New Delhi: India's household wealth held in gold is estimated at 34,600 tonnes, worth around $3.8 trillion or 88.8 percent of GDP. This is providing a positive wealth effect on the household balance sheet, with gold prices scaling new highs in the festive season, with customers rushing to buy the precious metal as the festival of light approaches.
Domestically, the Diwali festival has always boosted gold demand, as festive buyers return to the market.
Gold prices are currently at all-time highs, trading around $4,056 per ounce, with domestic prices also reaching record levels of around Rs 127,300 per 10 grams. Year to date, gold prices have risen by 54.6 per cent in US dollar terms and 61.8 per cent in INR terms, according to a Morgan Stanley report.
India remains the world’s second-largest consumer of gold, accounting for about 26 per cent of global demand, just behind China at 28 per cent. Traditionally, household consumption represents the bulk of this demand, but there has been a notable increase in central bank purchases at the margin.
The Reserve Bank of India (RBI) has added approximately 75 tonnes to its gold reserves since 2024, bringing its total holdings to 880 tonnes, which now constitute about 14 per cent of India’s total foreign exchange reserves, the report observes.
Experts say gold prices are on a strong upward trend due to global economic and political uncertainties, especially in the US. Expectations of an interest rate cut by the US Federal Reserve have further boosted investor sentiment.
According to reports, traders are expecting a 25-basis-point rate cut in October with a 95 percent probability, and another similar cut in December with an 82 percent chance.
Gold demand is showing signs of recovery after a four-month slump, as consumers accept high prices are here to stay. Gold retail stores report increased footfalls, with 18-karat gold gaining traction in northern and eastern regions. After a four-month lull, green shoots of gold and gold jewellery demand are visible in the last two weeks as consumers have realised the high prices are not going to cool off anytime soon.
Investment demand is really strong right now. Expecting prices to rise further, investors didn’t mind paying extra even over record high prices, a Mumbai-based bullion dealer was quoted as saying in reports.
Karva Chauth sees bumper sales
The festival of Karva Chauth alone is estimated to have generated business to the tune of Rs 28,000 crore nationwide -- up from the corresponding figure of Rs 22,000 crore last year. Delhi alone contributed around Rs 8,000 crore total turnover with Chandni Chowk, the largest wholesale market in the country, witnessing vibrant festive activity.
Last year, the total business on Karva Chauth was approximately Rs 22,000 crore, while in 2023, it stood at around Rs 15,000 crore -- indicating a sharp rise in festive trade this year, according to CAIT data.
Silver crosses Rs 1.64 lakh level
The Indian bullion market remained bullish. The silver price witnessed a strong rally, soaring over Rs 15,000 per kilogram to end at an all-time high of Rs 1.64 lakh per kg. Gold also saw a moderate uptick, rising more than Rs 2,000 per 10 grams during the period.
Amid the modest mining, tight geopolitical conditions and surging festive demand, India’s silver exchange‑traded funds (ETFs) are trading at steep premiums over international benchmarks.
