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Dhanteras and the Gold Standard: India’s Timeless Love for the Yellow Metal

As Dhanteras marks the beginning of Diwali, it’s more than just a festive day—it’s a gold rush, celebrating wealth, prosperity, and the promise of a bright future. India, one of the world’s largest gold consumers, celebrates Dhanteras with a dedication to gold-buying that makes it a high point of the market each year.

 

India’s Massive Demand and Unique Supply Gap

India’s love affair with gold is both cultural and economic, rooted in traditions that see gold as a must-have for celebrations, weddings, and even as a store of value. The country’s demand for gold is so vast that it surpasses domestic supply by an incredible margin. India’s demand stands at approximately 50 times its own production capacity, making it heavily reliant on imports to meet this gap. In contrast, China, the second-largest gold market, produces over one-third of the gold it demands, illustrating India’s unique reliance on the international gold market.

 

Recent Policy Shifts and Their Impact on India’s Gold Market

The Indian government’s recent reduction in import duty from 15% to 6% has reshaped the landscape of India’s gold market. This duty reduction, designed to curb illegal imports and encourage a formalized gold market, triggered an immediate drop in gold prices from ₹75,000-76,000 per 10 grams to around ₹69,000-71,000. This strategic shift encouraged a renewed surge in demand, especially as Dhanteras approached. Imports doubled year-over-year to over $10 billion in August 2024, driven by this drop in costs, and large jewellers saw revenue growth of around 20%.

Global economic changes also play a key role, especially as uncertainties like the Red Sea crisis, the ongoing Russia-Ukraine war, and the Israel-Palestine conflict add to the appeal of gold as a safe-haven asset. Central banks worldwide are stocking up, pushing prices up from approximately ₹55,017 per 10 grams in 2022 to around ₹80,330 per 10 grams in 2024. In India, this trend has also kept the precious metal in high demand, especially in regions like Delhi, where prices have reached all-time highs of ₹79,800 per 10 grams this month.

 

Cultural Commitment Meets Savvy Investment

Despite rising prices, Indians continue to buy gold, driven by Dhanteras, wedding traditions, and cultural values. Yet, the way people are buying gold is changing: rather than impulsively buying during the festive season, consumers are now planning their purchases throughout the year. Many urban buyers are also diversifying their investments, showing increased interest in gold ETFs and digital gold, blending tradition with financial modernity.

Meanwhile, consumers in semi-urban and rural areas are still going strong, demonstrating growing purchasing power. Their involvement is significant, especially with the onset of the wedding season, which accounts for almost half of India’s annual gold demand. The festive season also adds fuel to this demand, with gold being a traditional and valued gift for special occasions, like weddings and childbirth.

 

Retailers’ Innovations to Meet Festive Demand

Retailers, too, are rising to the occasion. Despite the high prices, many jewellers are offering special purchase schemes, such as discounts on making charges and installment-based purchases. They are also rolling out targeted campaigns designed to tap into the spirit of Dhanteras, providing incentives that make gold more accessible to a broader demographic.

 

Tradition and Transformation in India’s Gold Market

This year, Dhanteras epitomizes India’s evolving relationship with gold. While gold’s role as a cultural symbol remains unshaken, changing economic conditions and shifting consumer behavior have led to a more calculated, year-round approach to buying. This blend of tradition with modern investment sophistication illustrates how India’s gold market is transforming without losing its roots.

As we celebrate Dhanteras today, it’s clear that India’s love for gold goes beyond mere value—it’s about tradition, resilience, and adapting to change. India’s gold market, one of the largest in the world, remains a powerful testament to the nation’s cultural legacy and its readiness to embrace modernity, bringing wealth and good fortune to generations to come.

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