Gold prices soar ahead of Diwali; consumers prefer solid metal over jewellery

Mumbai: Gold prices are at an all-time high ahead of Diwali and the wedding season, but it has not slowed down the consumer demand though many of them seem to prefer "solid bullion" rather than jewellery, traders said on Thursday.

The price of the yellow metal stood at Rs 1,28,395 per 10 grams on MCX during the day.

"Gold prices are increasing every day, and people are looking at this and coming in to invest. Demand for jewellery has slowed, but people are buying gold bars and coins. We are seeing a lot of demand for gold and silver bars in this festive season and ahead of the wedding season," said Vrishank Jain, owner of Umedlal Tilokchand Zaveri Jewellers in Mumbai's famous Zaveri Bazaar.

"Many buyers are locking in current prices through advance booking or buying gold coins, as they expect a further surge in gold and silver prices in the coming days," he told PTI Videos.

Consumers often see gold as a long-term investment, and it also has deep cultural significance in India as buying gold during festivals like Dhanteras and on occasions like weddings is considered auspicious, Jain said.

Devras Bhai Parmar, a customer visiting Zaveri Bazaar, concurred with Jain.

"Buying gold during Diwali is considered auspicious, and it is an investment. In times of emergency we can get cash in exchange for gold....It has been a tradition in my family to buy gold during every Diwali," Parmar said.

Kumar Jain, spokesperson of the Indian Bullion Jewelers Association, vouched for the trend of buying "solid bullion". "People who have weddings are coming in to recycle their old gold, and there is no slow-down in demand. The US trade war, increase in stamp duty, Ukraine-Russia and Middle East tensions....all this has contributed to the surge in gold prices," he added.

Sharmila, another customer at Zaveri Bazaar, said she buys gold every year. "Despite the price surge, I will still buy this time, maybe a little less in quantity....I also want to teach my kids about the tradition of buying gold on auspicious occasions, and how it is an investment for the future. If I buy a car, it won't even fetch me half the price after a few years, whereas gold will double in price," she said.