Gold Prices Hit Record High Before Diwali – What’s Driving the Surge?

Gold prices in India have reached an unprecedented ₹63,000 per 10 grams, just weeks ahead of Diwali. This historic milestone is reshaping the market as buyers balance tradition with high prices. Despite the surge, demand remains strong, fueled by cultural sentiment, seasonal factors, and global trends.

Record-Breaking Price Movements

Spot gold rates recently crossed the ₹63,000 mark per 10 grams, surpassing previous records. On the Multi Commodity Exchange (MCX), December gold futures opened near ₹60,915 per 10 grams and climbed to an intraday high of ₹61,268, settling at ₹60,952—a rise of ₹308 or 0.51% in one session.

Since January, 22-carat gold has risen from ₹50,600 to ₹56,000, while 24-carat has jumped from ₹55,200 to ₹61,090. Year-on-year, gold has appreciated by more than 18%, outperforming equities for the fourth Diwali season in a row. Over the last eight years, gold has beaten stock market returns in seven.

Cultural and Seasonal Demand

The timing of this price surge is critical. Diwali, and especially the day of Dhanteras, is traditionally considered the most auspicious period for buying gold. In India, gold is not just a commodity—it’s a symbol of prosperity and spiritual wealth. Families across the country continue to prioritize purchases despite the elevated prices, reflecting the deep cultural bond between Indians and the yellow metal.

Additionally, the wedding season overlaps with the festive period. Weddings account for nearly half of India’s annual gold demand, with about 10 million weddings a year. Between November and December alone, around three million weddings generate demand for approximately 135 tons of gold.

Investment Demand Strengthens

Beyond tradition, gold trading is rising. Uncertainty in global markets and expectations of further price gains have boosted demand for gold coins, bars, and ETFs. Gold-backed exchange-traded funds have seen positive inflows for four consecutive months, indicating growing investor confidence in gold as a safe-haven and portfolio diversifier.

Global Influences on Domestic Prices

Gold’s rally in India is also shaped by global economic trends. A recent US Federal Reserve interest rate cut and a weaker dollar have increased international gold demand. The US dollar index has fallen nearly 12% this year, making gold cheaper for global buyers. Geopolitical tensions and central bank stockpiling, particularly in Asia, further support the price uptrend.

Conclusion

The combination of record prices, deep-rooted traditions, wedding season demand, and global tailwinds has created a unique market environment this Diwali. While prices are high, consumer enthusiasm remains resilient—reflecting gold’s enduring role in Indian culture and investment strategy.

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