The UAE-India gold trade is expected to see a surge in the coming weeks on the back of an estimated 3.2 million weddings in India between mid-November and mid-December, driving up demand for the yellow metal in a big way in the domestic market, industry insiders said.
The rising trend of bullion investment due to uncertainties in the stock market and spike in inflation is also expected to push up gold demand in the South Asian country.
India meets most of its gold demand through imports, with the UAE being the second largest exporter of yellow metal to the South Asian country.
Market study by India’s leading traders’ body – Confederation of All India Traders (CAIT) – estimated that over 3.2 million weddings will be solemnised between November 14 and December 14.
The capital city Delhi alone is said to see 350,000 weddings taking place during this period.
“This year is most certainly a year of celebration as evidenced by the success we saw this festive season with demand for gold jewellery soaring to pre-pandemic levels,” Karim Merchant, chief executive officer of Pure Gold Jewellers, a leading Indian jewellery retailer group with presence across the Middle East, told Arabian Business.
“The pickup in sales is likely to continue as we head into the wedding season. We expect a 30-40 percent jump in gold sales during this period,” Merchant said.
Merchant said gold import into India would increase significantly to meet this expected demand during the upcoming wedding season.
Ajay Kedia, managing director of Kedia Commtrade and Research, said he anticipated a strong buying demand for gold and jewellery, with more than 3.2 million marriages set to take place in a short span of a month in India.
“No wedding in India is complete without gold, with the emotional factor attached to it. People save for years to buy gold for big occasions like marriages,” Kedia said.
Kedia said there has been a significant spike in gold demand post-pandemic and this demand pickup was expected to continue strongly into the year-end marriage season.
“No doubt recent inflation has impacted (jewellery purchases) a little bit but again I have to say this (marriage-related) is emotional buying, so the inflation-related impact will be minimal,” he said.
India’s gold demand has reached pre-pandemic levels, with an annual growth of 14 percent during the July-September quarter at 191.7 tonnes, compared to 168 tonnes the same year-ago period, mainly driven by strong consumer interest, according to a World Gold Council (WGC) report.
Total jewellery demand in India during the third quarter of 2022 increased by 17 percent at 146.2 tonnes, compared to 125.1 tonnes in the same period last year.
Rising bullion investment on the back of price drop and weaker equity markets is another factor fuelling demand in India, with demand for bar and coins registering a 6 percent jump year-on-year to 45.4 tonnes in the July-September quarter.
Industry officials said they expected a jump in bullion investment on a near-term basis, as Indian retail investment is likely to benefit from safe-haven demand amid rising interest rates and a weakening rupee.
The uptick in India’s gold imports is also expected due to the falling prices, with the Dubai gold market seeing a two-and-half year low in the third week of September.
Kedia, however, said gold prices currently looked firm as the US Federal Reserve rate hike has already been digested by the market.
“The rising physical demand in India can lead to gold prices in India testing $638-$644 per 10gm by the year end,” he said.
Gold prices hovered around $1,710 per ounce on Thursday in the international market.
WGC estimates the full year demand for gold in India at about 800 tonnes.
Gold imports in the first three quarters were at 559 tonnes, according to the WGC estimate.
Follow us on
