Silver Dollar Economy

Traditional Seasons for Gold Jewellery Demand May Be Changing

It’s true that most traditions do not change. But what does change is the behaviour of the customers out there. With the modern information technologies that we have today, it’s hard for an investor or general consumer to not research online before putting his or her money somewhere.

This may be happening in India, where the traditional seasons that triggered gold demand increase, especially in gold jewellery, are not causing the same effect. On the contrary, these times of the year are featuring important lows.

Why is this happening? Hard to tell. During the last few years, India has suffered notable economic problems. Even with the nationwide tradition of buying remarkable amounts of gold jewellery, customers were forced to put their money somewhere else.

Gold Jewellery Had a Calendar

India is by far one of the greatest gold jewellery consumers in the world. This fact has been fuelled by national cultural traditions. A good example of this is Diwali, a millenarian celebration held between October and November.

The first day of Diwali is known as Dhanteras and it’s a day to celebrate wealth, something that those who sell gold jewellery do very well with. During that moment of the year, jewellers fill their pockets easily, even without caring too much about the prices. Indians, especially women, are willing to spend plenty to decorate their garments for the event.

Next to Diwali, India also has its wedding season, another moment of the year where the gold jewellery demand spikes. A big share of the Indian weddings’ budgets goes straight to the yellow metal as the tradition demands it.

Things Aren’t Working as Usual in the Gold Jewellery Industry

So far, it could be impossible to determine the causes behind the recent changes. Things aren’t simply working as they were before. Investors are now afraid of living in uncertainty as they cannot predict the flourishing Indian market of gold jewellery.

In an article published in GoldSeek and BullionVault, Mr. Frank Holmes identifies the odd trend that works as evidence of this change during recent years. “Historically, September has seen the highest returns on gold as Indians make huge purchases in preparation for Diwali and the fourth-quarter wedding season, but lately we’ve seen changes. When we calculate the average monthly returns of the past five years, from January 2012 to December 2016, we find that January is the strongest month, returning 5.3 percent, followed by August with 2.3 percent. September actually returns negative 1.3 percent,” says on the article.

The Bottom Line on the Gold Jewellery Market

With a changing gold jewellery market that we thought we knew already, it’s important to invest our money more wisely by making good use of patience. The Indian market is worth our attention. Nevertheless, we must stop taking things for granted.

The late demonetisation that occurred in India caused terrible problems for gold demand during the last few months of 2016. Now, we see how the economy is energetically recovering and the gold demand is getting back on track. We should watch how the jewellery sector develops under the current circumstances.

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