Buying gold and silver on Diwali is a tradition deeply rooted in Indian culture, but this year, the skyrocketing prices of these precious metals are expected to dampen enthusiasm. With gold and silver prices reaching unprecedented levels, retailers are forecasting a 10-12% drop in Diwali sales despite a recent reduction in customs duty aimed at easing prices for consumers.
Gold and Silver Prices Soar Amid Global Uncertainty
Over the past year, gold and silver prices have surged due to global economic instability. Gold has provided a return of more than 28%, while silver has climbed over 33%. Suvankar Sen, Managing Director and CEO of Senco Gold & Diamonds, attributes the rapid price rise to heightened global uncertainty, noting that “a very sharp increase in gold prices in a short period” has impacted sales as buyers hesitate amid escalating costs.
Wedding Season Silver Lining: Over 4 Million Weddings Post-Diwali
The festive season coincides with an exceptionally busy wedding season, as nearly 40 lakh weddings are scheduled to take place immediately after Diwali. Retailers are hopeful this will provide a boost to gold and silver purchases, particularly as gold’s status as a safe investment has been reinforced by current geopolitical tensions, especially in the Middle East.
Reduction in Customs Duty Helps, But Prices Remain High
The recent reduction in customs duty on gold, from 15% to 6%, has somewhat eased the burden, initially sparking increased buying activity. However, high prices continue to limit consumer spending, with sales falling about 10% compared to last year, according to Sayam Mehra, Chairman of the All India Gem and Jewellery Domestic Council (GJC). Despite the dip in consumer enthusiasm, Mehra believes the adjustment in customs duty provides long-term benefits for the sector.
Is Gold Still a Good Investment? Experts Weigh In
Investment in gold remains a preferred option, especially during Diwali. Colin Shah, Managing Director of Kama Jewellery, emphasized that “for those with a long-term investment horizon, gold remains a sound option,” as low interest rates and ongoing global uncertainties keep gold prices strong. Shah suggests that silver may be a practical alternative for investors seeking a lower-cost entry point or for gifting purposes during the festive season.
Digital Gold on the Rise as a Convenient Alternative
Shikhar Aggarwal, Chairman of BLS E-Services, points out the growing appeal of digital gold, which offers the convenience of buying, storing, and gifting gold securely. “Digital gold platforms have simplified the process, making it easy for buyers to invest and gift gold, whether for personal investment or Diwali gifting,” he said, highlighting a trend that has particularly resonated with younger consumers.
Outlook for Diwali 2024: A Tradition Under Strain
While Diwali remains a peak season for gold and silver purchases, high prices could shift consumer behavior, pushing some toward silver or digital options. The combination of escalating costs and global tensions has created a complex landscape for retailers and consumers alike, with buyers considering alternative ways to uphold tradition without stretching their budgets.
Bhupendra Singh Chundawat is a seasoned technology journalist with over 22 years of experience in the media industry. He specializes in covering the global technology landscape, with a deep focus on manufacturing trends and the geopolitical impact on tech companies. Currently serving as the Editor at Udaipur Kiran, his insights are shaped by decades of hands-on reporting and editorial leadership in the fast-evolving world of technology.