The festive season has kicked off across India, and with it, the traditional buying spree associated with Dhanteras has led to a significant surge in gold prices. Celebrated on November 12, 2024, this year’s Dhanteras has seen gold prices climbing to Rs 81,400 per 10 grams of 24K gold. Silver prices have also experienced an uptick, fueled by the ongoing festive rush and market sentiment.
Gold’s appeal as a safe-haven asset remains strong, especially amid current market volatility and geopolitical tensions. For investors, the precious metal has proven to be a solid asset, delivering impressive returns of 31% over the past year and 57% over two years. This track record has further increased its allure, making it a preferred choice for portfolio diversification during uncertain times.
“Dhanteras is considered an auspicious occasion to buy gold, and this year’s price surge reflects the strong demand from consumers and investors alike,” explained Rohan Shah, a Mumbai-based investment analyst. “With market uncertainties, gold’s recent performance has instilled confidence in investors looking to preserve their wealth.”
Festive Demand and Market Drivers Behind the Price Surge
The surge in gold prices is influenced by a combination of factors. The Indian festive season traditionally boosts demand for gold, particularly as it symbolizes good fortune and prosperity in Indian culture. Dhanteras, which marks the beginning of Diwali, is a popular time for both individual buyers and investors to purchase gold, whether in the form of jewelry or coins.
Investment demand has also contributed to the price increase. Many investors are buying gold as a hedge against potential economic instability, with rising inflation and uncertain global markets making the precious metal an attractive, secure investment. Additionally, the Indian government’s recent reduction in gold import duties has made gold more affordable, encouraging a higher volume of purchases.
“Gold prices are likely to remain high due to festive demand and increased investment interest,” stated Priya Patel, a commodity analyst. “With the reduction in import duties, gold is more attractive to buyers, and this has translated into higher demand.”
Geopolitical Tensions Add to Gold’s Appeal
Apart from the festive and investment-driven demand, geopolitical factors are also playing a role in driving up gold prices. Tensions in regions like Jammu and Kashmir, where Indian forces recently neutralized three terrorists in the Akhnur sector, remind investors of the persistent security concerns in the area. This type of geopolitical risk often drives investors towards safe-haven assets like gold.
“Geopolitical uncertainties can affect market sentiment, often pushing investors toward stable assets such as gold,” Shah added. “While a specific event may not have a large direct impact, it adds to the overall sentiment of caution and risk aversion.”
Regional Demand and Consumer Sentiment
Gold demand across India remains robust, with certain regions showing particularly strong purchasing activity during the festive season. In cities like Delhi, Mumbai, and Chennai, consumers traditionally purchase gold as a means to secure wealth and as an investment in future generations.
Ramesh Kumar, a businessman from Delhi, shared his perspective: “I buy gold every year on Dhanteras because it’s considered auspicious. Despite this year’s high prices, I am willing to pay a premium for the quality and symbolic value of gold.”
For many families, buying gold on Dhanteras is more than an investment; it’s a cultural tradition that signifies good fortune and security. This sentiment, deeply ingrained in Indian society, has helped keep gold demand high, even when prices rise.
Historical Price Trends: How This Year Compares
Gold prices in 2024 are notably higher than in previous years, reflecting both a growing demand for the precious metal and shifts in the global economy. For context, gold prices on Dhanteras 2023 were around Rs 65,000 per 10 grams. The rise to Rs 81,400 within a year highlights a substantial increase, driven by inflation concerns, increased geopolitical tensions, and changing consumer behavior.
Historically, gold has seen a price surge during the Indian festive season, but 2024 stands out due to the strong market and investment factors pushing prices even higher than expected.
Investment Insights: Choosing the Right Type of Gold
For new investors or those looking to buy gold this Dhanteras, experts recommend understanding the various options available. While traditional buyers often prefer physical gold in the form of jewelry, coins, or bars, digital and exchange-traded options have also become popular. These alternatives offer lower storage costs and allow easier liquidity, providing more flexibility for investors.
“Investors should consider gold as part of a diversified portfolio rather than a short-term investment. It’s best to balance physical and digital gold holdings depending on one’s goals,” advised Patel.
The Outlook for Gold Prices: Festive Season and Beyond
As Dhanteras gives way to Diwali and the New Year, experts expect gold prices to remain elevated, buoyed by the festive season and sustained investment demand. However, a potential price correction could occur after the holiday season, as demand subsides.
“Gold is best viewed as a long-term investment. Short-term fluctuations are common, especially after high-demand periods like Dhanteras,” Patel noted. “Investors should avoid speculating on short-term price trends and focus on the value of diversification.”
Conclusion
The festive season has given a strong boost to gold prices, making this year’s Dhanteras one of the most eventful in recent memory for gold buyers. Whether purchased for its cultural value, as a hedge against volatility, or as an investment asset, gold remains a popular and reliable choice in India.
With its enduring appeal, gold is expected to retain its position as a coveted asset for many, regardless of price fluctuations. Whether you’re looking to buy gold for its sentimental value or as a long-term investment, it remains a valuable addition to any diversified portfolio.
