Gold has been an important part of Indian culture for centuries. The yellow metal is associated with wealth and prosperity, and it is used in a variety of religious ceremonies. In addition, gold is seen as a symbol of status, and many Indian families save up for years to purchase gold jewelry. As a result, the country’s demand for gold is among the highest in the world.

India's Gold Demand During Diwali

India is one of the biggest markets for gold consumption. It's primarily used for jewelry, but it's also bought in the form of bars and coins. Most of the demand comes during two peak periods: October to December (around the Hindu festival of Diwali) and February to April (around the time when a lot of weddings take place). Indian gold buying tends to be influenced by a number of factors, including religious beliefs, social customs, and economic conditions. 

Gold Statue for Diwali Celebration

Indians consider it auspicious to purchase gold—a symbol of wealth, purity, and prosperity—on many festive occasions, and Diwali is the biggest one of them.

Diwali is a five-day festival that celebrates the triumph of good over evil and light over darkness, based on Hindu mythology. For many Indians, this festival is associated with welcoming good luck, positivity, and prosperity. People often dedicate gold purchases during Diwali to deities, especially Lakshmi, the goddess of wealth.

India's Record Gold Demand in 2021

Despite the challenges posed by the pandemic, demand for gold remained strong in 2020 and surged even higher in 2021. Indians bought a record amount of gold jewelry in the fourth quarter of 2021, driven by the festive season and pent-up demand from subdued celebrations and consumption in 2020. Overall, gold jewelry, bar, and coin demand in the second half of 2021 saw an 82% increase year-over-year. This trend looks likely to continue in 2022, with demand for gold up 7.3% in the first half of the year relative to 2021. Despite the volatility of the global economy, it seems that gold will remain a popular investment choice for many people around the world.

Chart Showing India's Gold Consumption

With Diwali celebrations in full swing, will India see another record quarter for gold demand? It remains to be seen, with gold’s festive tailwinds likely to meet economic headwinds in the form of uncertainty and higher import duties.

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