Why gold prices are likely to go higher this festive season


by 5paisa Research Team Last Updated: Dec 15, 2022 - 09:31 am 13.9k Views

India’s love for gold is unparalleled all over the world. And with Diwali around the corner the demand for the precious yellow metal is only going to go up. 

But this Diwali, Indians may find it harder to get their hands on the jewellery of their choice. 

If news reports are to be believed, gold supplying banks have cut back shipments to India ahead of major festivals in favour of focusing on China, Turkey, and other markets where better premiums are offered. 

A Reuters report said that this pushback could create a degree of scarcity in the world's second-biggest market for gold, and force Indian buyers to start paying hefty premiums for supplies in the approaching peak-demand season.

How is gold imported into India?

Leading gold suppliers to India - which include ICBC Standard Bank, JPMorgan and Standard Chartered - usually import more gold ahead of festivals and store it in vaults.

How precarious is the situation right now?

According to the Reuters report, vaults now hold less than 10% of the gold they did a year ago. 

How do Indian gold imports look right now?

India's gold imports in September fell 30% from a year ago to 68 tonnes, while Turkish gold imports soared 543%. China's net gold imports via Hong Kong jumped nearly 40% to a more than four-year high in August.

So, how low are premiums in India?

In India, premiums over the international gold price benchmark have slid to $1-$2 an ounce, against around $4 this time last year.

And why did these premiums go down so low?

Premiums were driven sharply lower by a now-closed loophole that led some Indian trading houses to import gold as lower-tariff platinum alloy, allowing some to even offer gold at a discount, the report said. 

How much better are premiums elsewhere?

That contrasts with the $20-45 premiums offered in top consumer China, helped by pent-up demand being released after COVID-related lockdowns, and $80 in Turkey, where gold imports have risen sharply against a backdrop of rampant inflation.

How do you rate this blog?


Start Investing in 5 mins*

Rs. 20 Flat Per Order | 0% Brokerage

About the Author

Our research team is composed of some highly qualified research professionals, their expertise range across sectors.

Open Free Demat Account
Resend OTP
Please Enter OTP
Account belongs to

By proceeding, you agree to the T&C.

Latest Blogs
UTI Nifty 50 ETF Face Value Split: What It Means for You?

Exchange-Traded Funds (ETFs) have gained immense popularity in recent years as an investment vehicle. They offer investors exposure to a diversified portfolio of assets, much like mutual funds, but with the added advantage of being traded on stock exchanges throughout the trading day. 

  • Sep 26, 2023
Top 5 Luxury Brands in India in 2023

In a world grappling with economic downturns, India stands tall as a beacon of economic growth and potential. With an estimated 7% growth rate in 2023, India is poised to become the fifth-largest economy globally. The Indian luxury market is not far behind in this remarkable growth story.  Recent reports suggest that India's luxury market is set to soar to unprecedented heights, offering a lucrative playground for both domestic and international brands.

  • Sep 26, 2023
Marco Cables & Conductors IPO: How to check the Allotment Status

The IPO of Marco Cables & Conductors Ltd has a fresh issue component and also an offer for sale (OFS) portion. As part of the fresh issue portion of the IPO, Marco Cables & Conductors Ltd issued a total of 26,01,000 shares (26.01 lakh shares), which at the fixed IPO price of ₹36 per share aggregates to a total fund raising of ₹9.36 crore.

  • Sep 26, 2023