beyondbrics

Gold frenzy is back in India. With less than a month to go before Diwali, the Hindu festival of light, Indian consumers – the world’s biggest importers of bullion – are stocking up.

Forgotten now are the doubts of the summer, when jewellers told beyondbrics that rising global prices and economic worries were putting off customers. Indian buyers are once again doing their bit to drive world prices higher.

December gold on India’s Multi Commodity Exchange in Mumbai hit a new record of Rs19,615 per 10 grams, overtaking the previous high of Rs 19,537 struck on Wednesday. The trade now expects prices in India to surpass the Rs20,000 mark by Diwali, which falls on November 5 this year.

Rajendra Gurjar, owner of a gold store in South Mumbai who spoke to beyondbrics nearly six months ago when demand was dropping sharply in India, today said that things had turned around.

“People are buying again as they expect prices to go up considerably in the next months,” said Gurjar. “People will buy even more during the months of October…before Diwali.”

Gurjar said he expected gold prices to reach between Rs22,000 and Rs23,000 by the end of the year. His bet is a little higher than what most analysts have been predicting, but many think it’s not impossible.

The constant rise in prices is not a deterrent for Indian buyers, who see gold as a must-have during the festival season.

Gurjar also said that since the economy picked up many of his usual clients have gone back to buying bigger quantities of gold and of the highest quality. “The mood is good and back to the highs of the good days”.

Abishek Pherwani, a manager at Sunderdas & Sons Jewellers, who also spoke to beyondbrics in May this year, said that more people were looking to buy the shiny metal. “People are making money with the exchange and are using some of that money to buy gold.”

Whether the frenzy will last is an open question, but with less than 30 days to go before Diwali, the betting is that it won’t fade before the festival.