**A Golden Diwali: How Soaring Prices Are Reshaping India’s Love Affair with Gold**
As the Hindu festival of Diwali approaches, the bustling Lajpat Nagar neighborhood in Delhi, famed for its jewelry markets, is more vibrant than ever. Despite the record surge in gold and silver prices, crowds throng the streets, their enthusiasm for the precious metals undimmed. Neon signs beckon from shop fronts festooned with flowers, and even holidays can't keep the stores shuttered as the city gears up for one of its most auspicious seasons for buying gold.
**Tradition Meets Economic Reality**
Diwali, along with Dhanteras—a festival that falls just before Diwali and is specifically dedicated to the purchase of precious metals—is considered an especially lucky time for investing in gold and silver. For generations, Indian families have believed that buying gold during this period brings prosperity and good fortune. This deep-rooted tradition has made India the world’s second-largest consumer of gold, with hundreds of thousands flocking to markets every year to buy coins, bars, and jewelry.
This year, however, the festive spirit contends with a sobering economic reality. Gold prices have soared to over $1,440 (about £1,081) per 10 grams, while silver has followed suit, rising even faster. The result is a 60% jump in gold prices and a staggering 70% climb for silver compared to previous years. For many, this has put a strain on their budgets, forcing both consumers and retailers to adapt.
**A Shifting Marketplace**
Despite the steep prices, jewelers like Prakash Pahlajani, who runs the family-owned Kumar Jewels, report no shortage of customers. In fact, he describes a kind of "FOMO"—fear of missing out—among buyers, who worry that prices might rise even further if they postpone their purchases. “I have more customers this year,” he told the BBC, as his shop bustled with activity.
Yet, the surge in prices has changed the way people shop. Tanishq Gupta, another jeweler in the area, notes that while customers aren’t walking away from gold entirely, many are reducing the quantity they buy. “People are not saying, ‘I don’t want to buy.’ Instead, they’re saying, ‘I’ll buy a little less,’” he explained.
To cater to tighter budgets, jewelers have become more innovative, creating designs that appear elaborate but use less gold. For example, coins that once weighed 250mg and sold for about $35 are now made thinner, giving the illusion of size without the associated cost. Some shops even offer coins as light as 25mg, making gold accessible to buyers with limited means.
**Changing Tastes and Investment Trends**
Another noticeable trend is a growing preference for lighter, more versatile jewelry, especially among younger consumers. Pushpinder Chauhan, a retailer in the area, observes that many buyers now seek pieces suitable for everyday wear rather than just special occasions. This shift reflects not only changing fashion sensibilities but also economic pragmatism, as buyers look to maximize their investment in uncertain times.
In addition to personal adornment, more Indians are viewing gold and silver as financial assets rather than just decorative items. Data from the World Gold Council (WGC) illustrates this shift: while gold jewelry still constitutes the largest portion of gold demand in India, the share attributed to investment—mainly through bars and coins—has been rising steadily. Kavita Chacko, the WGC’s research head, points out that jewelry’s share of total demand dropped from 80% to 64% in the second quarter of this year, while investment demand rose from 19% to 35%.
Much of this investment is now happening not just in physical gold but also through financial products like exchange-traded funds (ETFs) and digital gold platforms. September saw record inflows into gold ETFs, with assets under management rising by more than 70% this year alone. This suggests that, even as some buyers are priced out of traditional jewelry, they are still finding ways to participate in gold’s upward trajectory.
**The Central Bank’s Growing Gold Reserves**
The story of gold’s rising significance in India is not limited to individual households. The Reserve Bank of India (RBI) has emerged as a major player in the global gold market, steadily increasing the metal’s share in its foreign exchange reserves