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(Kitco News) – Record crowds during India’s most important celebration on Sunday could potentially be positive news for the gold market.
Sunday, millions of people in India and around the world celebrated Diwali, the Hindu festival of light. The five-day festival is an important event for the global gold market as India is one of the world’s top gold-consuming nations and the precious metal is often given as a gift during the holidays.
Even before the record turnouts throughout India, analysts were expecting this year’s celebration to have a solid impact on gold demand.
Harshal Barot, senior research consultant at Metals Focus, said that demand has been volatile through most of the year; however, lower prices at the start of the month created some optimism. “
“It has indeed been busy ahead of Diwali, with our contacts suggesting good sales momentum in early October when the price corrected. That said, the increased volatility since then has negatively impacted sentiment. Given the festive season is still underway and the wedding season follows, it is early to comment on y/y growth. The recent cooling off in the gold price just ahead of Dhanteras (November 10) may bode well for demand,” said Barot.
In a recent interview with CNBC’s Indian affiliate media, Surendra Mehta, national secretary for the India Bullion and Jewellers Association, was optimistic regarding Diwali gold sales. “We should be looking at 20-22% higher sales this Diwali,” he said.
Vinod Bamalwa, ICC chairman of the Gems and Jewelry committee and director of Nemichand Bamalwa & Sons, said that he sees sales increasing gold demand by 25% to 30% from last year.
In a recent interview with Kitco News, George Milling-Stanley said that solid physical demand in India and other emerging markets should provide solid support for gold as prices hold elevated gains into year-end. He added that following Diwali is India’s wedding season.
“This is typically the strong seasonal period for physical gold demand, so there are reasons to be optimistic that gold prices will hold on to their recent gains,” he said.
