by Coinstrooper Crypto Articles
Quick Take
  • India, the world’s second-largest gold consumer, usually does most of its buying between October and December.
  • This year, its largest jewelers are holding back, waiting for cheaper gold.
  • Gold traded at $4,044.65 on Wednesday, down 3.26% from a month earlier, according to Trading Economics.
  • India and China together account for about half of global gold demand, so a slow Indian season removes support from one of the metal’s two biggest markets.

What Happened

Investment flows had been filling part of the gap. Gold exchange-traded funds (ETFs) drew a record $31 billion in the third quarter, according to the World Gold Council.

Market Context

Gold traded at $4,044.65 on Wednesday, down 3.26% from a month earlier, according to Trading Economics. India and China together account for about half of global gold demand, so a slow Indian season removes support from one of the metal’s two biggest markets.

Larger jewelers run down stock when they expect further declines and buy once prices start climbing, Guha said.

India’s import duty, raised to 15% in May, has also pushed some buying into cash markets.

Chinese households have moved the other way, buying more as prices dropped.

That support is now fading, with ETF holders pulling out nearly 17 tons in three trading days, Bloomberg reported.

Markets see a roughly 90% chance the Fed holds on Wednesday, Cowen noted. Amundi added that a December hike is largely priced in.

Why It Matters

Citi Research expects October-to-December imports near 106 tons, about half the usual level. It cites tighter import rules and weaker rural demand.

Amundi, Europe’s largest asset manager, still expects a recovery to about $4,500 but no longer sees $5,000 by year-end.

Analyst Benjamin Cowen expects a 2018-style Federal Reserve (Fed) rate hike in December. He said gold’s bottom could take until January 2027.

With little Fed surprise expected, gold’s next move may hinge on when India’s big jewelers return.

Details

India, the world’s second-largest gold consumer, usually does most of its buying between October and December. This year, its largest jewelers are holding back, waiting for cheaper gold.

Why Are India’s Biggest Jewelers Holding Back This Festive Season?

Samit Guha, chief executive of refiner MMTC-PAMP India, said most purchases now come from small and mid-sized jewelers.

“If gold rebounds, we will see buying,” he added.

For now, that caution hits India’s peak season around Diwali, the Hindu festival of lights, on November 8.

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Can Gold Hold $4,000 Long Enough for India’s Buyers to Return?

Saxo Bank strategist Ole Hansen marks $3,970 as support. He said a sustained break above $4,230 is needed to trigger short covering.

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The post India’s Biggest Jewelers Have a Diwali Plan for Gold: Buy Less of It appeared first on BeInCrypto.