As the world’s second largest consumer of gold, India can exert a
significant influence on the precious metals market. Indian demand is
particularly robust for one of the country’s key festivals, Diwali, which
starts this week.
Perhaps the most important and widely celebrated Hindu festival, Diwali
celebrates the victory of light over darkness and honours Lakshmi, the
goddess of wealth and prosperity.
This year could prove to be a bumper one following a decision by the
Indian government to exclude gold retailers from the provisions of the
Prevention of Money Laundering Act. The move has freed customers from the
need to provide their tax code for every purchase above 50,000 rupees.
Precious metal consultancy GFMS has reported that India’s gold imports in
September were up 31% from a year ago as jewellers increased their purchases
to meet the expected demand*.
The country’s imports could rise above 70 tonnes for October as banks and
other importers are increasing overseas purchases for the five-day Diwali
festival, GFMS said. “Higher purchases by India, the world’s
second-biggest consumer, could lend support to global prices,” it added.
Diwali, or the festival of lights, is one of a number of significant Hindu
festivals celebrated at this time of year. Late last month Hindus celebrated
Dussehra, the victory of good over evil, during which gold buying is also
considered auspicious.
But
perhaps nothing displays India’s insatiable appetite for gold more than the
wedding season which takes place between October and December
There are up to 20 million weddings in India every year and brides love to
take gold jewellery to extravagant levels, many wearing spectacular hair
accessories, nose rings, earrings, necklaces and amulets.
At these highly ritualised events gold is liberally exchanged among
couples and their families in the form of gifts or coins. These symbols of
prosperity and security epitomise gold’s deep-rooted allure in Indian
culture.
As well as signifying wealth and status, gold has been part of worship,
culture and mythology for thousands of years. No possession is deemed more
valuable.
No wonder that when plentiful monsoonal rains boost crop yields, there is
nothing flush farming folk like more than exchanging their hard earned cash
for gold. It’s said the rural population account for about a third of India’s
gold consumption.
There’s also plenty of interest for gold among the country’s burgeoning
urban middle class, with wealthy investors and speculators now trading in the
metal at the heart of many Indian traditions.
*Reuters
