Indias Love for Gold is a Centuries-Old Tradition

(January 26, 2017 - by Muhammad Riaz Usman)

In India, the affinity for gold is deeply rooted in centuries-old tradition and its popularity as an investment. Gold is considered as auspicious, a harbinger of prosperity and a perfect adornment for any celebratory occasion.

Across the country, throughout the year, festivals are celebrated with gold such as, Akshaya Tritiya, Pongal, Onam, Ugadi, Gudi Pavda, Baisakhi, and Diwali. Gifting gold is also a part of marriage traditions in Indian society. It is estimated that weddings generate approximately 50 per cent of annual gold demand.

According to the World Gold Council’s quarterly report, global gold jewelry demand in the third-quarter of 2016 fell 21 per cent year-on-year to 493.1 tons. In India demand dropped by almost a third to 154.7 tons.

"Jewelry demand in India was soft due to higher and volatile prices of gold and government regulation curtailing unaccounted income," the report said.

India is one of the largest gold consumers, with a 24 per cent share of total demand. Successive governments have struggled to curb Indian appetite for gold. The government, in its February 2016 budget, imposed an excise duty of one per cent on gold and diamond jewelry, on top of 10 per cent import duty, in a move to dampen demand for the precious metal in the world’s second biggest consumer.

However, the WGC, in its 2017 gold market outlook, says macroeconomic trends in Asia will support economic growth over the coming years and, this will drive gold demand.

"In India, the government’s decision to remove large denomination rupee notes took around 86 per cent of India’s circulating cash out of its economy. While the purpose is to replace them with newly printed notes, we believe that the liquidity squeeze could have a temporary negative effect on economic growth, and may also affect gold demand in the short term. But more importantly, we believe that the transition to transparency and formalization of the economy will lead to stronger Indian growth in the longer term, thus benefitting gold," the report says.

DSF promotions a win-win situation

With all its glamour, fun, festivity, and ultimate shopping experience, the Dubai Shopping Festival (DSF) is attracting millions of shoppers from around the world for more than two decades.

And there’s no excitement or shopping fun in the ’city of gold’ without buying gold jewelry. Like all previous DSF, Dubai Gold and Jewelry Group (DGJG) came up with its mega promotions for this year.

According to DGJG, one hundred lucky winners will collectively get 34kg of gold during the 34 days of the festival. The promotion, which started on December 26, will run until January 28.

Over the last two decades, more than 900kg of gold has been given away as DSF prizes, making many an instant millionaire. Including the 34kg gold this year, the total gold given away as DSF prizes by the DGJG is nearing one ton - a whopping 937kg of gold.

The first prize winner will receive 1/2 kg of gold, the second and third lucky winners will take home 1/4 kg of gold each. In all, there will be 100 lucky winners over the 34 days of DSF celebrations receiving gold prizes worth around Dh5 million. Customers who purchase gold jewelry worth Dh500 will be entitled to one raffle coupon, and customers who purchase diamond jewelry, pearl or watches worth Dh500 get two raffle coupons to take part in the daily raffle draws. Raffle coupons will be provided by all the participating jewelry outlets, kiosks and all terminals of Dubai Duty Free during the DSF.

"This year, we hope for an excellent sale season as the gold price is at very affordable levels and tourist footfall is great. The jewelry sector managed to pull in higher footfall into the stores during the last two weeks and this has translated into an increase in the average value per transaction compared with what it was during the previous three months," says Tawhid Abdullah, chairman of DGJG.