Will soaring gold prices dim the Diwali sparkle?

Indian festive season, traditionally marked by glittering gold purchases and soaring jewellery sales, is facing a dampener this year. Gold prices have surged past an ₹1,00,000 per 10 grams, turning the much-anticipated shopping period into a subdued affair.

Slow demand, fewer sales

The sharp rise in prices is hitting budgets directly. A 20-gram necklace or coin, which would have cost under ₹1.5 lakh last year, is now well over ₹2 lakh. For many middle-class families, the jump is simply too big.

The result has been a noticeable dip in demand. As per India Bullion & Jewellers Association, gold sales between Raksha Bandhan and Onam were down about 28% this year. Customers may still walk into showrooms, but more often than not, they leave without buying.

What’s driving prices higher?

The surge in gold rates isn’t just about festive demand, it’s shaped by larger global and local forces:

Global uncertainty: With conflicts and slowing growth worldwide, investors are flocking to gold as a safe-haven asset.

Central banks buying: Several countries are adding large volumes of gold to their reserves, pushing up demand globally.

Rupee vs. Dollar: Since India imports most of its gold, a weaker rupee against the dollar makes it pricier for Indian buyers.

Local investor interest: With stock markets swinging, domestic investors are also treating gold as a safer parking spot for money.

Put together, these factors are keeping gold prices firmly on the boil.

A bigger hole in the pocket

Experts say gold prices are unlikely to soften anytime soon, meaning household budgets may remain under pressure in the coming months.

For many, the decision is no longer about whether to buy gold, but how much of the festive budget should be sacrificed for it.

The big test for many households is simple: will Diwali still shine without gold, or will the festival of lights adjust to new ways of sparkle?