Traders in India report a disappointing gold demand during the traditional Hindu festival Diwali. The high price of gold is cited as the most important reason.
The five-day Hindu festival Diwali is one of the most profitable periods for gold and jewellery dealers in India. This year the Festival of Lights began on 27 October and will end next Thursday.
Gold traders do not celebrate
According to Indian media reports, gold sales around this event were weak. India Today, for example, reports that the shops sold around 40 percent less gold and silver than a year ago. The Confederation of All India Traders (CAIT) even estimates that on the first day of the festival, Dhanteras, only around 6 tonnes of gold were sold – compared with 17 tonnes a year ago. Traders speak of the weakest turnover in more than ten years.
Gold price at record level
Above all, the strong rise in the price of gold and silver had dampened demand. The gold price, calculated in rupees, rose by 17 percent within a year and reached a new all-time high at the beginning of September. The Asian gold market is generally considered price sensitive. But the weakening economy has also led to a decline in gold and silver business, according to the traders’ association.