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Summary:

Despite record high gold prices, Indians spent an estimated Rs 1 lakh crore during Dhanteras, with Rs 60,000 crore attributed to gold and silver alone, a 25% increase from the previous year. While gold prices saw a correction on Saturday, dropping significantly from Friday’s all-time high, Dhanteras saw robust consumer demand, especially for lightweight jewelry and bullion. The price drop is attributed to profit-taking after a global rally. Gold continues to be a strong investment, fueled by factors like a weaker dollar and expectations of interest rate cuts. Silver prices also fell. Analysts observed a shift toward smaller gold purchases and coins due to high prices.

News Article:

Gold Prices Dip After Record Highs on Dhanteras, but Demand Remains Strong

New Delhi, India – October 29, 2024 – Gold prices retreated in the national capital on Saturday after hitting record highs the previous day, but strong demand persisted as Indians celebrated Dhanteras, the auspicious beginning of the Diwali festival. While buyers flocked to jewellery stores nationwide, gold prices experienced a significant correction, dropping by Rs 2,400 to Rs 1,32,400 per 10 grams, according to the All India Sarafa Association. On Friday, gold had surged to an all-time high of Rs 1,34,800 per 10 grams. Silver prices also tumbled, falling by Rs 7,000 to Rs 1,70,000 per kilogram.

The price correction is attributed to global profit-taking after a recent rally in precious metal prices. However, the festive spirit of Dhanteras fueled robust consumer spending.

“Irrespective of the sky-high price of gold, favorable economic conditions and the GST reforms, there has been a tremendous response,” said Colin Shah, Managing Director of Kama Jewelry. He noted a demand for light-weight jewellery, especially among younger buyers, and traction in the bullion market.

The Confederation of All India Traders (CAIT) estimated that Indian consumers spent a staggering Rs 1 lakh crore during Dhanteras, with Rs 60,000 crore specifically on gold and silver. This represents a 25% increase compared to the previous year, despite gold prices being up over 60% year-on-year. Delhi’s bullion markets alone recorded sales exceeding Rs 10,000 crore.

“The past two days have seen an unprecedented rush in jewellery markets,” said Pankaj Arora, national president of CAIT’s jewellery chapter.

Analysts note that gold continues to be an attractive investment due to factors like a weaker dollar and expectations of interest rate cuts by the US Federal Reserve. Inderbir Singh Jolly, CEO of PL Wealth Management, observed a growing preference for gold coins and bars over expensive jewellery as fabrication costs rise.

Despite the lower quantity, the sales value in monetary terms saw an approx. 12-18 per cent surge as Consumers have adapted to buying design-rich ornaments and lightweight buying with smaller items like gold coins due to record high prices, said N S Ramaswamy, Head of Commodities & CRM, Ventura.

Key Takeaways:

  • Dhanteras Spending: Indians spent an estimated Rs 1 lakh crore on Dhanteras, a significant portion on gold and silver.
  • Price Correction: Gold and silver prices dropped on Saturday after hitting record highs, attributed to global profit-taking.
  • Strong Demand: Despite high prices, consumer demand for gold, especially lightweight jewellery and bullion, remained robust.
  • Investment Factors: Gold continues to be seen as a strong investment due to economic factors and geopolitical uncertainty.
  • Shifting Buying Patterns: Consumers are adapting to high prices by purchasing smaller gold items, like coins.

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