India’s gold sales dip amid uncertain US election and record-high prices during Diwali season

While gold is often seen as a safe haven, traders are hesitant to purchase due to the potential for price fluctuations after the US election

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A salesman helps a customer select gold bangles at a jewellery showroom in Mumbai. Gold prices near record highs, driven by US election uncertainty, are dampening India’s peak festival gold buying season, with sales down 10-20 per cent. Photo: Reuters

Published: 7:30pm, 29 Oct 2024

Near-record high gold prices, driven by global economic uncertainties and the coming US election, are weighing down purchases of the precious metal during India’s most auspicious buying season, according to traders.

India, one of the world’s largest gold consumers, typically sees a surge in demand between Dhanteras, celebrated on Tuesday this year, and Diwali, the festival of lights, on Thursday. This marks the peak gold buying period in the country, as it is believed to attract the blessings of the Goddess of Wealth.

Gold jewellers and traders in India who spoke to This Week in Asia estimate a 10 to 20 per cent decrease in sales volume compared to last year’s peak buying period, which starts a month before Diwali.

“Purchases are certainly down this year from last Diwali in volume terms, although the sales value is around the same,” said T.K. Chandran, managing director of DKTM Jewellery Ltd, which operates around 50 showrooms nationwide.

“Most people are saying that those prices could change only after the US elections,” he added.

The closely-contested US presidential election between Donald Trump and Kamala Harris, which will take place on November 5, means the price of gold is likely to remain near current levels in the near term, analysts say.