The Hindu festival of lights, Diwali, is just around the corner, and according to Bloomberg, India’s gold buyers are viewing increased prices. In India, the precious metal is at its highest price in two years.
Diwali traditionally involve gold gifts. For Hindus, wearing and giving away gold jewelries during celebrations is believed to bring good luck and historically, the last quarter of the year features strong gold demand. However, some people are speculating that India shoppers preparing for the holiday might pass on gold this year, due to the high prices.
Does it mean that no one will buy gold? Of course not. But there is a possibility that those who would, will buy less. We could have a better clue of how the boosted prices affected demand closer to the holiday, but of course, even that would only be an estimation.
Why does it matter what happens in a local market? Because India is the biggest market for gold, right after China.
Why are prices rising? The weak rupee is one major reason.
There are many factors that could affect the price of gold, including:
* Usage in central bank reserves
* Level of confidence in global markets
* The discovery of a new mine
* Change in the jewelry industry
* Changes in related industries and technologies
* The USD’s volatility
What will happen to the price of gold and will the Diwali have any impact on it? At iFOREX, you can trade CFDs on precious metals, as well as hundreds of other instruments, and open trades regardless of whether you believe prices will increase or decrease.