Indian jewellers are really optimists about the upcoming Diwali and wedding season. For Indian people, purchasing gold jewellery and coins during these two yearly events it’s a priority that no one with economic possibilities can miss. And this year, it will not be different.
Despite all the chaos around the world, including at the financial markets, gold remains fundamental in this traditional culture. The significance behind gold for India goes beyond the financial safety it provides in both times of calm and uncertainty but because of its beauty and spiritual value.
Public reports are showing, year after year, that Indian demand for gold is on the rise. With a bigger percentage of well-educated citizens, India is valuing more and more this precious metal.
Now, with an extremely prosperous monsoon this year and slowly falling prices of gold, jewellers are expecting a really profitable final quarter. In recent months, a strike in this sector was hurting the economy but that conflict was partially solved in order to face the upcoming commercial challenges.
The Role of the Wedding Season
For foreign people, the Indian wedding season could seem too extravagant. For locals, it’s a tradition that should be respected at all cost. After Diwali season every year, weddings begin, involving a great deal of gold jewellery.
This tradition that seeks prosperity and good luck for each marriage involves a massive demand for the precious metal. Published reports say that the average Indian wedding has around 35 percent of its budget dedicated to buying gold jewellery, with businesses which sell gold jewellery remaining one of the countries most competitive sectors.
With this happening altogether within a few weeks, it’s normal to see a great boost in gold prices. Based on this fact alone, forecasts regarding sales are overwhelming.
The Role of the Monsoon
Without a good monsoon, the Indian economy is more fragile and susceptible to suffer big losses. Fortunately, this year’s monsoon was spectacular, filling farmers’ pockets beyond expectation.
This isn’t an isolated event. The performance for seasons like Diwali or the wedding one are linked to monsoon every year. When the monsoon isn’t that favourable, gold demand goes down, making these festivities less ostentatious and luxurious.
In fact, both local and foreign analysts consider that this year’s monsoon will allow the biggest gold jewellery demand during Diwali season in the recent four years.
A Race with China
Despite this strong tradition, the gold jewellery demand during the second quarter of 2016 wasn’t led by India. According to reports, China had 83.8 tons in consumption of gold jewellery, defeating India by more than 10 tons.
The second place in this race was dominated by India, of course, with 69.2 tons. Experts are sure that these Dewali and wedding seasons will change these results. That isn’t hard to believe, having in mind that gold consumption is among the highest priorities for most families.
According to an FICCI Gold Survey in 2013, gold jewellery and coins were more important than clothing, utilities, consumer durables, and entertainment for the average Indian household.