Gold and Diwali: What’s the Connection?
Diwali is a five-day festival celebrated by millions of Hindus, Sikhs, and Jains worldwide.
This religious event, known as the Festival of Lights, is often marked with feasts, fireworks, and lamp lighting. Diwali falls on November 4th this year, but the preparations for the event began far earlier. One practice that is acknowledged among practically everyone who celebrates Diwali is the giving of presents and the purchasing of goods for the house. Buying and/or giving gold (and occasionally silver) presents is particularly popular since the precious metal is said to promote riches and success.
Origins of Diwali
Diwali, also known as “Deepavali,” is an ancient Indian event with roots dating back over 2,500 years. Diwali’s origin narrative, like many customs that originated in the subcontinent, is a mixture of several myths and stories that have been weaved together through the years. “Deepavali” means “series of illuminated lights” in Sanskrit, thus the name “Festival of Lights.” The lighted lights, according to Hindus, are the lamps that illuminated the path home for Rama (an incarnation of the deity Vishnu) and his wife Sita after 14 years in exile.
Others observe the occasion to mark the birth of Lakshmi, the goddess of wealth. Diwali coincides with the New Year in Gujarat, therefore many celebrants pray to Lakshmi for wealth in the coming year. While Diwali is a religious celebration, its religious importance varies throughout India and Indian communities across the world.
Gold and Diwali
The exchange of presents and the purchase of household items is a ritual that practically everyone who celebrates Diwali recognizes. Buying and/or giving gold (and occasionally silver) presents is particularly popular since the precious metal is said to promote riches and success. The first day of Diwali, known as “Dhanteras,” is a day of acquiring and sharing gold with friends, family, and neighbors among people who celebrate Lakshmi’s birth. In India, jewelers and gold coin dealers usually witness a 20%-30% increase in sales in the run-up to the festival.
If you are celebrating Diwali with friends and family, a visit to gold coin buyers and sellers will assist your family in preparing for Dhanteras. If you want to buy gold you can consider buying digital gold from OroPocket as gold makes an excellent present or fortunate purchase for yourself and your loved ones.
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Diwali’s Influence on Gold Spot Price
Diwali is celebrated by the great majority of Indians, with around 800 million people celebrating each year. Although everyone interprets the occasion differently, purchasing gold is a family tradition. Families appear to purchase gold at any price. Notably, gold is India’s second-largest import after crude oil. Because India is the world’s second-largest country, Indian gold demand weighs on the bigger markets on top of their own. Indeed, given that India is the world’s second-largest gold consumer after China, this demand has a significant influence on worldwide gold markets.
Diwali has such a strong demand that it accounts for one-fifth of India’s yearly gold purchases! In particular, jewelers and gold bullion dealers in India frequently claim a 20-30% rise in sales in the run-up to Diwali. According to reports, many customers save up for large-ticket items during this holiday period. However, this might also be due to the fact that it is still Indian marriage season. Despite the fact that India must also account for the epidemic and celebrate properly, gold purchasing may be a reasonably secure ritual. As a result, despite the holidays, a drop in the current price of gold seems improbable.
According to a report, jewelers and gold coin dealers in India usually witness a 20%-30% increase in sales leading up to the festival. Jewelers and firms in India are stockpiling gold in preparation for this holiday season’s demand. According to Mumbai-based investment company Edelweiss investor research, gold imports into India increased by a stunning 107 percent month on month in August.
However, The India Times reported last month that gold imports fell 57 percent to USD 6.8 billion in the first half of FY21. India is the world’s biggest importer of gold, mostly to meet the needs of the jewelry sector. In terms of tonnage, the nation imports 800-900 tonnes of gold per year. However, according to another edition of the India Times, demand has improved and gold imports are expected to be 25-30 tonnes in October, up from 11 tonnes in September.
Fine gold is defined as pure gold with a fineness of 999 or above. Yellow gold has silver as the major alloying element, rose gold has copper as the main alloying element, and white gold has either palladium or nickel as the main alloying element.
Gold Remains A Key Feature In Household Expenditures Across The Financial Spectrum
Some argue that, with the rise of the middle classes and urbanization, the term “rural household” has become obsolete and misunderstood. Between 2001 and 2016, India’s middle class expanded by 67 percent. This shift in India’s demography will undoubtedly result in new expectations and habits.
Some market observers see millennials as a possible catalyst for the gold market in both India and China. While the desire to acquire and hoard gold has been pounded into them all, there are now a variety of different ways they’d want to spend their money.
One must also consider how a pinched middle-class would perceive gold’s 0.9 percent return in rupee terms since 2013, compared to property’s 5.6 percent and local stocks’ 11.9 percent.
Digital Gold and Diwali
Buying gold this Diwali, Dhanteras? Check the top 5 advantages of digital gold investments.
No Storage Hassle
Gold, being a valuable item, requires storage space. When purchasing in significant numbers, investors may be required to pay for bank vaults to keep it secure. However, investing in digital gold eliminates any such storage difficulties since the gold is maintained in a digital form that cannot be stolen.
Investors interested in investing in digital gold may begin with as low as Rs 1. OroPocket allows investors to deposit as little as they desire to begin their investment experience.
No Tension of Quality or Purity
Users purchasing digital gold may choose the purity of the metal at the time of purchase. There are a variety of possibilities, including 18-carat gold, 22-carat gold, and 24-carat gold. Before investing, investors may choose the purity of the gold.
Investors who sell digital gold within 36 months after acquisition are exempt from paying capital gains tax. As a result, digital gold is one of the most tax-efficient investment possibilities. However, if an investor sells gold after 36 months, capital gains tax of 20% is levied on proceeds, in addition to the 4%.
Additional Read: Digital Gold – Is it Worth it?