Gold Movements Ahead of Diwali: Between Tradition and Global Factors
Every year, ahead of the Diwali and Dhanteras festivals, demand for gold in India increases sharply. This is not just an investment trend, but part of a cultural tradition: buying gold during this holy period is believed to bring good luck.
Historical data shows that gold demand in India indeed spikes ahead of Diwali. In fact, in recent years, domestic gold prices have risen by almost 30% during this period. Banks and jewelry retailers typically increase their stocks starting in September to anticipate the high buying interest.
Interestingly, however, the impact of this surge is not always felt in the global gold market. Global spot gold prices remain more influenced by macroeconomic factors such as the Fed's interest rate, US dollar movements, inflation, and geopolitical uncertainty. This means that even if physical demand increases in India, global prices can remain stable or even decline if external factors are unfavorable. However, seasonal factors during Diwali—such as increased demand for gold jewelry, gifts for family, and purchases of gold as a symbol of good luck—often provide an additional boost to market sentiment, supporting gold price movements domestically and sometimes influencing global market psychology.
Furthermore, seasonal patterns often occur. After Diwali, India's domestic gold market often experiences a mild correction due to waning demand and investor profit-taking. This highlights the importance of distinguishing between short-term trends based on tradition and long-term trends determined by global economic conditions.
For investors and traders, the lead-up to Diwali can be an opportunity to anticipate a surge in gold demand, particularly in the Indian domestic market. However, for the global market, broader fundamental analysis is still necessary so that investment decisions are not solely dependent on seasonal factors, but also on the direction of monetary policy, inflation, and the strength of the US dollar.
In other words, while Diwali may indeed brighten gold's luster in India, its brilliance in the global market remains dependent on global economic dynamics.
Source: Newsmaker.id
