As gold prices suffered some of the largest weekly losses since the end of September, largely fuelled by positive news surrounding several promising coronavirus vaccines, there may be hope for a positive recovery for the market after all. With the wedding season in India well underway, the demand for the precious metal is expected to rise – especially given the attractiveness of current bullion prices.
According to Reuters, jewellers in India have been rushing to refill their stocks after demand for gold soared during the Diwali festival that took place during the middle of November. Another bullion dealer in India had also told Reuters they had witnessed a larger-than usual increase in gold purchases for weddings, which is likely the result of pent-up demand from postponed ceremonies as a result of the pandemic.
Indeed, India’s gold demand does usually rise during the busy wedding season and the Diwali festival, but consumers have also recently taken an interest in the precious metal due to the attractiveness of current prices. Bullion futures were the subject of the largest weekly drop since late September, with February contracts dropping sharply from over $1,850 per ounce to $1,780 per ounce by the end of the week.
However, despite the recent uptake in gold buying in India, the country’s overall gold demand was still down by one-third during the July-September quarter relative to last year’s levels. The World Gold Council also noted that the global demand for the precious metal fell by 19% during the same period to 892 tonnes – the lowest quarterly total in over a decade.
Information for this briefing was found via Reuters and the World Gold Council. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.