Diwali 2024: Will inflation affect gold buying during Dhanteras in Mumbai?

The most anticipated days for gold or sliver purchases during Diwali 2024 are the Dhanteras, also known as Dhantrayodashi. This auspicious occasion, falling on November 1, 2024, traditionally sees families flocking to jewellery stores to invest in gold, silver, and other precious metals. However, with inflationary pressures still lingering in the Indian economy, many are left wondering: Will inflation affect gold buying during Dhantrayodashi in Mumbai?

Gold prices and silver prices:

With Diwali 2024 and Dhanteras fast approaching, gold and silver prices have soared to new highs. The rising demand for precious metals in anticipation of these important Indian festivals has further fuelled market fluctuations.

Gold was priced at Rs 77,910 per 10 grams in Mumbai on October 24. Silver was trading at Rs 97,100 per kilogram.

Mumbai's age-old gold buying tradition

In Mumbai and the rest of India, during Dhanteras, buying gold is considered a sacred ritual. It symbolises wealth, prosperity, and good fortune. Over the years, this custom has remained resilient, with families continuing to invest in gold regardless of economic circumstances.

As Nitin Karekar, a local jeweller in Mumbai's Girgaon, explains, "Dhantrayodashi is not just about buying gold; it's about investing in auspiciousness. While prices have increased, people still find ways to buy, even if it means smaller quantities."

This view is shared by many Mumbaikars, who regard gold as a long-term investment rather than merely a festival purchase.

Impact of inflation on gold prices

Despite the cultural significance of Dhantrayodashi, inflation has been a concern for consumers in 2024. With the cost of living rising and salaries often not keeping pace, disposable income has been affected. As a result, the price of gold, which tends to increase during inflationary periods, may deter some from making large purchases this year.

Gold prices have fluctuated globally, influenced by geopolitical events, central bank policies, and domestic inflation. A financial analyst stated, "Gold is widely recognised as a safe haven, particularly during periods of economic uncertainty, as it has reliably offered security in such times. But one should know that buying gold during inflation is a double-edged sword. On one hand, people want to invest in gold to protect their wealth, but on the other hand, rising prices may limit how much they can afford to buy."

In Mumbai, where real estate and living costs are already high, inflation may further squeeze household budgets, forcing families to reconsider how much gold they purchase this Diwali.

Jewellers offering solutions

To mitigate the impact of rising gold prices, many jewellers in Mumbai are offering innovative solutions. EMI schemes, discounts, and even lightweight jewellery collections have been introduced to attract customers. By doing so, they hope to ensure that the tradition of buying gold remains intact.

A owner of a jewellery store in Zaveri Bazaar, said, "We understand that inflation is making it difficult for people to spend as much on gold. That's why we've introduced installment plans and smaller, more affordable designs. We don't want anyone to feel they can't celebrate the festival properly."

This adaptive approach shows the resilience of Mumbai's jewellery market, which is finding ways to cater to consumers despite economic challenges.

Consumer behaviour and sentiment

Though rising inflation has been a spoil sport during festivities, the emotional and cultural significance of purchasing gold remains deeply rooted in Mumbai. Many families see it as a necessary expense, even if it means cutting back in other areas. For some, gold is not just a financial investment but a way to honour tradition and family values.

A local resident, Darpana M, said, "Every year, we make it a point to buy gold, no matter the price. It's part of our Diwali celebration. We may buy a smaller piece this year, but we won't skip the tradition."

This sentiment is widespread, and although there may be a decrease in the quantity of gold purchased, the overall market is anticipated to stay strong.

A balancing act

Inflation may affect the extent of gold buying during Dhantrayodashi in Mumbai, but it is unlikely to dampen the spirit of the festival entirely. While some consumers may opt for smaller or more affordable purchases, the cultural importance of gold on this day ensures that many will still invest, even if in smaller quantities.

As financial expert Ramesh Iyer aptly summarises, "Inflation can impact purchasing power, but traditions like buying gold on Dhantrayodashi are deeply ingrained in our culture. The market may see a shift in consumer behaviour, but the demand for gold will persist."

With festive joy, family gatherings, and the hope for prosperity guiding the spirit of Diwali, Mumbai's love for gold remains unwavering, even in the face of rising prices.