India’s Diwali festival, which starts October 18, 2017, and lasts five days, is approaching. It is customary for people to buy gold at this time for the upcoming festival and wedding seasons, and populous India is one of the world’s largest consumers of gold. Gold is projected to regain ground at this time, recovering from September lows. According to NDTV, India’s gold imports:
“… recorded a threefold jump to $15.24 billion during the April–August period of the current fiscal year, Commerce Ministry data showed. Gold imports, which have a bearing on the country’s current account deficit, stood at $5.08 billion in April–August 2016–17. In August this year, imports of the precious metal rose to $1.88 billion from $1.11 billion in the corresponding month of the previous fiscal year. … The imports are expected to increase on account of the forthcoming festival season, which will start from the end of this month.”
India’s gold demand for 2016 was 600 tons. India’s gold demand for 2017 is expected to increase to 650 to 700 tons. India and China are the world’s two top physical buyers of the precious metal. According to Bloomberg, China’s gold demand is rising on concerns over property, share and bond markets and the outlook for the yuan, amid a government drive to reduce leverage in the financial system.
India and China together account for more than 50% of world’s physical gold demand. Gold prices, which have been pulling back in a steady downtrend and are now at an 8-week low, are expected to bounce back in price due to this seasonal demand combined with geopolitical tensions.