A sharp rally of about 40 per cent in gold prices over the past one year — mostly owing to the Covid crisis — has not deterred Indians from making purchases of the precious metal during this festival season.

Prices ruled firm in the yellow metal also because the election as US President of Democratic candidate Joe Biden triggered hopes of an economic stimulus package.

But in a pleasant surprise for jewellers and bullion dealers in India, Pushya Nakshatra (the auspicious day for gold purchases during Diwali) saw good buying interest. Though gold purchases were nearly 50 per cent lower this time over last year, they were still higher than expected.

Speaking to BusinessLine , Shantibhai Patel, President, Gems & Jewellery Trade Council of India, said he was buoyed by this trend. “There is a world of difference between the sentiment two months ago and today. People have started coming out for shopping, there are weddings lined up and also good monsoon has lifted the rural buying.

“However, the overall sales are still down 50 per cent from last year, but it is much better than what we had feared it would be,” Patel said, adding that most purchases are happening in light jewellery including chains, rings or earrings.

On November 8, 2019, India gold (999 purity for 10 grams) was quoting at around ₹38,072, and hit a high of ₹56,126 in August 2020 when the pandemic was at its peak in the country. However, prices have cooled off since with growing optimism on the economy and dropped to ₹49,757 in September. But Biden’s win and the still raging pandemic have lifted prices to ₹52,420, as quoted by the India Bullion and Jewellers Association (IBJA).

World Gold Council’s India MD, Somasundaram PR, sees modest gold buying this festival season. “Dhanteras is special as the situation is challenging but the hope and the thirst for recovery is much stronger than ever. Gold, the most ubiquitous Dhanteras investment, is the best performing asset class and in addition, the higher savings following drop in consumption expenditure of many households as a result of lockdown could flow to gold.”