Gold is deeply embedded in Indian culture and purchases are often driven by tradition. Typically, all family members are involved in decision making about how and when gold jewellery purchases are made. Discussions over the years between Metals Focus and retail jewellers have revealed that weddings remain the key motive for buying gold in India.
As our 2019 consumer retail insights survey demonstrated, weddings were the number one purchase occasion to buy gold (17%), followed by other important occasions such as birthdays (12%) and festivals (11%). Focusing on the impact of religion and festivals, gold is often seen as a symbol of wealth and prosperity in the Hindu religion.
In particular it is associated with Lakshmi, the goddess of prosperity, fertility and productiveness. During the country’s most important festival of Diwali, Hindus pray to the goddess for prosperity, and gold is an important part of that ritual. According to Hindu mythology the creator of the universe, Brahma, known as Hiranyagarbha, was born from a golden egg.
Gold has always been considered a sacred colour, and so gold adornments are worn for specific rituals and events. In religious ceremonies gold coins are often used for pujas (an Indian worship ritual). Most Indian gods and goddesses wear gold-embroidered clothes or jewellery. If one looks at the images of various deities, such as Lakshmi, Ganesh or Krishna, one will always find them wearing some form of jewellery.
During the festivals of Diwali and Akshaya Tritiya it is considered extremely auspicious to buy gold. Dhanteras (the first day of Diwali) usually falls during October or November, and Akshaya Tritiya between late April and early May. Hence retailers across the country introduce attractive designs in the run-up to these occasions. On average around 40-60t of gold is sold in India during these two auspicious festivals alone.
Underlining the importance of these occasions, the household survey of India Gold Policy Centre–IIM Ahmedabad (IGPC-IIMA) found that 65-70% of respondents cited festivals as their main gold purchase occasion, with Dhanteras and Akshaya Tritiya accounting for 30-35% of these purchases. And with prominent overseas Indian populations, the Middle East and East Asia also see significant gold buying at these times.
Finally, agriculture makes up an important part of Indian gold demand. Even though the sector now accounts for less than 19% of the Indian economy, a large swathe of rural India is still dependent on agriculture and related industries. Put another way, while there has been rapid urbanisation across much of the country, 65% of the population still lives in rural areas, highlighting the importance of agriculture as a key driver of gold demand. Gold demand in rural communities usually picks up after the harvest season. Harvesting of Kharif crops runs from September until November and about 70% of Indian agricultural production takes place during the Kharif season. As shown in the heatmap below, the combination of the wedding season, harvests and festivals means that demand tends to be concentrated in two periods: April to June, and September to January.