Indians abstain from purchasing gold a week before Diwali
Two weeks from now, Indians the world over will be celebrating Diwali, the festival of lights.
Over four days of celebrations, there is one common thread that weaves across the Indian diaspora — most Indians buy gold.
Diwali heralds the end of the harvest season when most homes in India's rural areas are flush with funds. Increasing urbanization saw people in urban areas continue with the tradition of buying gold.
Gold has traditionally been considered to be a 'safe investment', but this year it's a different story.
Due to the devastating drop in stock prices and a slump in the share market, traders in Mumbai's bullion exchange are seeing a sharp drop in the sale of gold.
A salesperson at Raj and Meera Jewellers in Toronto, when contacted said, "Usually we do find a lot of customers coming in, but this time round it is different. With the Indian wedding season in full swing and Diwali just round the corner, sales at this time pretty much set the bar on how we will fare over the rest of the year. It does not bode well, for sure."
At Randhawa Jewellers, which is across the road from Raj and Meera in Etobicoke, it is much the same. A chain of jewelry stores in a strip mall overlooking Albion Road lie in wait for customers that seldom trickle in.
"Every year I buy gold during Diwali, even though I am in Canada for the past 12 years," said Dhira N. Shah, a Mississauga-based esthetician. "It is a traditional thing, but this year I think I will skip it, rather keep my cash liquid instead of tying it up in an item which does not offer me much stability."
The same sentiments are being echoed half way across the world.
Selloff fearsAccording to A. Kumar, proprietor of Kumar Jewelers in Mumbai's gold market known as Chira Bazaar, there has been an increase in the number of people selling off their gold, either in the form of jewelry or coins.'
"If people are not going to buy gold now when sales are supposed to peak, they will not buy it for the rest of the season. Not only have sales dipped, most people entering my store are doing so to sell off their gold," he said.
With the biggest Indian festival just 13 days away, the Times of India reports that gold traders in the Indian Capital of New Delhi claim that their sales are down 40 per cent compared to last year.
Gold prices are normally high during the festive season but even though there has been a drop in prices, people are selling and not buying gold, the newspaper noted.
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