Consumers’ plan at least a token purchase during festive!

 

Demand largely driven by investment & wedding related purchases! 

Sachin Jain, Regional CEO, India, World Gold Council said, “Buying gold is considered auspicious during Dhanteras, Diwali. From gold jewellery to gold bars, gold coins consumers plan at least a token purchase as a matter of tradition as gold buying is generally believed to herald good fortune, wealth and prosperity and that is visible in the sharp rise in gold buying historically witnessed on this day. 

Despite gold prices touching record highs of Rs 79,000/10 grams, anecdotal feedback from Industry indicates a resurgence in gold buying due to various ongoing festivals, with demand largely driven by investment sentiment and wedding related purchases. 

The retailers have also invested on new designs and innovative usage of technology to make daily wear, lighter jewellery considering heightened gold prices, to invite consumers to come into the stores. There is also an expectation of increased demand from rural areas, driven by improvements in robust economy and consumption.  

Good monsoons and higher crop sowing this year are anticipated to boost rural incomes further, potentially leading to higher gold purchases. Investment demand including digital gold, gold ETF’s, gold bars and coins remains strong, with purchases also emerging from new channels such as e-commerce and Q-commerce. Overall, we are expecting gold demand uptick to continue this Diwali and till end of the year due to the wedding season.”  

In the row, Sandip Raichura, CEO - Retail Broking and Distribution, Director - PL Broking and Distribution said, “Gold has, since our previous piece indicating $2550 as a crucial level, held on to minor gains in the background of the Israeli conflict and the shift in global monetary policy, with major central banks embarking on rate cuts.  

To add to this mix is the tight presidential race between Trump and Harris in the US – with the outcome too uncertain, markets are becoming risk-averse on the margin. With increased risk aversion across the globe gold's attractiveness as a safe-haven asset has come to the fore. Although China has paused its gold purchases in the second quarter, it has showed no signs of selling reserves in the following months while other central banks continue to accumulate including our own.  

As we mentioned previously, the $2,550 per ounce level as a pivotal point for potential pullbacks. Should prices revisit this level, traders might find buying opportunities for mid-term bullish positions. These support levels are expected to continue to hold especially as the fourth quarter presents a perfect geopolitical recipe for gold's performance.  

The risk is that technical indications suggest gold prices as being significantly overbought with both the weekly and monthly RSIs lodged above 80 levels or thereabouts - history has shown that these RSI levels result in a sharp turn in gold prices. Despite this history though, we remain bullish with a stop placed at around 2602 levels.  

The movement in the DXY, which has climbed up in the last week, remains a critical sign of the times to come for precious metals – a rise here is negative for gold.”