What's Happening?
During the recent Diwali festival, Indian consumers spent between $8 billion to $11 billion on gold, with a notable shift from traditional jewelry to gold bars and coins. This trend was observed in Mumbai's
Zaveri Bazaar, a key market for precious metals. According to the India Bullion and Jewellers Association and the All India Gem and Jewellery Domestic Council, over 40 tons of gold were sold on the first day of Diwali alone. The shift in consumer preference is attributed to the rising value of gold, which saw a 66% increase by mid-October, although it later stabilized at a 55% increase. This change in buying behavior reflects a growing interest in gold as an investment rather than just a decorative item.
Why It's Important?
The shift from jewelry to gold bars and coins indicates a significant change in consumer behavior, driven by the perception of gold as a stable investment. This trend could impact the jewelry industry, which has seen a 30% drop in sales compared to the previous year. The increased demand for gold bars and coins could lead to supply shortages, as noted by Ajay Chawla, CEO of Tanishq, one of India's largest jewelry chains. This development also highlights the broader economic implications, as gold remains a critical asset for wealth preservation, especially in times of economic uncertainty.
