Gold Prices Open Higher Amid Global Cues and Wedding Season Demand; Experts Advise Strategic Buying

Gold and silver prices began higher on the MCX on Friday, November 7, influenced by global market trends and a weaker US dollar. Global gold prices rose due to expectations of a potential US Federal Reserve interest rate cut in December and demand for safe-haven assets amid the ongoing US government shutdown. By the end of the trading day, gold saw a slight dip, while silver remained steady.

With India's wedding season at its peak, consumers are contemplating their gold purchases. The prolonged surge in gold prices has been significantly driven by substantial buying from central banks in emerging markets since 2022, according to Nilesh D Naik, Head of Investment Products at Share.Market (PhonePe Wealth). He also noted that global gold ETFs saw purchases of nearly 600 tonnes by September. Central banks are expected to continue accumulating gold as long as geopolitical uncertainty persists and prices do not escalate drastically. Global geopolitical events, such as the freezing of Russian assets, have encouraged nations to diversify their reserves, further supporting gold prices.

Despite elevated prices, domestic demand in India remains resilient, though it is evolving. Parag Shah, CEO of KISNA Diamond and Gold Jewellery, observes that gold prices are likely to stay strong throughout the wedding season, supported by festive and bridal demand. Consumers are increasingly opting for combinations of gold and diamonds, with diamond-studded gold, lightweight 18KT pieces, and Polki-diamond blends gaining popularity. Shah anticipates 22KT gold prices to range between Rs 11,000 to Rs 13,000 per gram during peak wedding months. He advises families to be prepared for moderate fluctuations. Naik suggests an investment strategy of accumulating gold via gold ETFs or gold mutual funds over time to mitigate price risks, then converting to physical gold when needed. The jewellery landscape is changing, with modern designs and hybrid pieces becoming smart companions to traditional gold.

Impact This news has a significant impact on the Indian jewelry market and consumer spending during the crucial wedding season. Rising gold prices, coupled with evolving consumer preferences towards lighter, diamond-studded, or hybrid jewelry, can influence purchasing decisions, sales volumes for retailers, and overall household budgets. It also provides insights for investors tracking commodity markets and inflation hedges. Rating: 7/10

Difficult Terms * **MCX**: Multi Commodity Exchange of India. It is a commodity derivatives exchange where trading of various commodities like gold, silver, crude oil, and agricultural products takes place. * **US Fed**: The United States Federal Reserve, commonly known as the Fed. It is the central banking system of the United States and is responsible for monetary policy, including setting interest rates. * **Safe-haven demand**: This refers to increased demand for assets that are considered less risky during periods of economic or political turmoil. Gold is often seen as a safe-haven asset. * **Central bank buying**: This is the practice by national central banks of increasing or decreasing their holdings of gold. Central banks often hold gold as part of their foreign exchange reserves to diversify assets and maintain financial stability. * **Geopolitical uncertainty**: This refers to instability and unpredictability arising from international relations, political conflicts, terrorism, or other global political events that can affect financial markets and economies. * **Gold ETFs**: Gold Exchange-Traded Funds. These are investment funds that hold physical gold or gold futures contracts and trade on stock exchanges, allowing investors to gain exposure to gold prices without directly holding the metal. * **Gold mutual funds**: These are investment funds that pool money from multiple investors to invest in a portfolio of gold-related assets, such as gold mining stocks, futures contracts, or physical gold. * **Polki**: A traditional form of uncut diamonds, typically used in Indian jewelry, often set in gold. It is known for its rustic charm and historical significance. * **KT (Karat)**: A unit used to measure the purity of gold. Pure gold is 24 Karat (24KT). Other common purities for jewelry include 22KT (91.67% gold) and 18KT (75% gold). * **22KT gold**: Gold that is 22 parts pure gold out of 24 parts, meaning it is 91.67% pure gold. The remaining parts are typically other metals like copper or silver, used to make the gold more durable for jewelry.