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Investors often see Indian festivities as an opportunity to profit from the gold market. If the conditions are set, there is money to earn in this sector. Are the conditions ideal for the upcoming Diwali?

This festive season is one of the most prosperous for the gold jewellery business. Indian culture does not only value the precious metal for its beauty or financial stability but for its culture meaning.

But there are many factors that could be affecting Diwali’s performance in terms of gold jewellery and coins sales. Those factors are the ones we should look closely because they will give us a good insight of what is going to happen.

The Tradition

If you aren’t up-to-date about Indian traditions, we can tell you that several festive seasons take place during the last quarter of every year. What is more interesting is that these same festivities are partially based on their love for gold. They spend exaggerated amounts of money on gold jewellery, not matter what.

After the Diwali season is over, the wedding season begins. And notice that around 30 percent of the average wedding’s budget is intended to purchase gold jewellery. Even without festive seasons happening, gold jewellery and coins are one of the main priorities for the average Indian household. Simply. Amazing.

Monsoon’s Role

Now, Indian people do not have bottomless pockets. Their financial capabilities during Diwali and other festivities constantly depend on a single event: monsoon. This climate event defines agriculture’s performance and profitability. With a poor monsoon, the gold jewellery business experiences low sales. Usually, this is a mandatory rule.

The good news is that this year the monsoon was more than solid. After three years of disgrace, agriculture experienced an outstanding season, boosting output beyond expectations. This quickly translates in rich farmers, ready to spend absurd amounts of money on gold jewellery.

Gold Prices’ Role

A bullish gold market isn’t always good for everyone. Indian jewellers were complaining over the high prices of the precious metal during the present year, making jewellery more expensive as a consequence. This is a fundamental factor when it comes to sales.

Jewellers are afraid of what is going to happen. Yes, the monsoon was amazing but gold prices increased exponentially, making them increase the prices to maintain their products affordable and competitive.

Despite this, many experts agree that this Diwali and wedding season will be extraordinary for jewellers. There is great liquidity on the streets and a burning desire of purchasing  gold jewellery, along with income to allow more jewellers to create and sell gold jewellery.

Our Conclusion

Yes, conditions are quite set. With an outstanding monsoon and jewellers working full-time after a productive strike, Indian consumers are ready to spend on gold like never before. The previous three years were highly negative in this matter because of poor monsoons but now the panorama has changed.

If you want to invest in gold, the time is right. The price will increase exponentially as the market remains bullish against all the odds. Even with a possible rate hike from the FED, the U.S. elections do not inspire calmness in investors’ hearts.

GoldNews: Miguel