Dhanteras 2021: India to see Rs 20,000 cr gold sales on firm demand; Experts see prices around Rs 52,000-53,000 by next Diwali

Dhanteras is the first day of a 5-day long Diwali festival that is considered an auspicious day for buying gold, silver and other valuables. The festival is celebrated in northern and western parts of India.

“Gold has always been integral to festivals and celebrations in India, particularly so during Dhanteras and Diwali. We expect this Dhanteras and Diwali to be one of the best in recent years even when benchmarked to pre-COVID seasons. Pent up demand, softening of gold prices and good monsoons along with easing of lockdown restrictions across the country, bode well for a surge in demand,” said Somasundaram PR, Regional CEO, India at World Gold Council.

“Millions attribute great fortune to any investment in gold during Dhanteras. Anecdotal feedback from the jewellery retailers reflect this sentiment strongly this season,” Somasundaram stated.

Surendra Mehta, National Secretary, IBJA said, "Gold demand has been 45-50% higher than 2019 (pre-pandemic) which was around 30 tonnes and likely to touch 45 tonnes today (approximately Rs 20,000 crore)."

He attributed the higher sales to 'increase in portfolio allocation and wedding season demand.'

Also read: Dhanteras 2021: Buying gold during Diwali ideal way to mix tradition with financial acumen, says CapitalVia Global Research

Suvankar Sen, CEO, Senco Gold and Diamonds said, “Dhanteras is an auspicious occasion to buy gold. In the last few days, we have seen an increased footfall at our stores, shortlisting their products for purchase on the day of Dhanteras.”

“Average ticket size has been increased as the gold price is down by 12-15% from the high and people are preferring to buy large pieces,” he noted.

The two-day FOMC meeting starts today to revise the policy stance. Weak US economic growth in third quarter and higher consumer spending in the recent months resulted in increased caution to the market ahead of US FOMC session.
Gold holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell by 2.62 tonnes to 979.52 tonnes. The ETF has a market value of $56.47 billion.

Also read: Dhanteras 2021: Invest in jewellery for happiness and asset building this festive season: Senco Gold CEO

The dollar index traded slightly higher to 93.92, up 0.05 percent against a basket of six rival currencies.

Spot gold eased by $3.43 at $1,789.83 ounce at 1231 GMT in London trading.

MCX Bulldek declined by 52 points or 0.36 percent to 14,330 at 6.01 pm. The index tracks the real-time performance of MCX Gold and MCX Silver futures.

The gold-silver ratio stands at 74.50 to 1, which means 74.50 ounces of silver is required to buy an ounce of gold.

Silver prices moderately rose by Rs 12 to Rs 64,208/kg against its closing price on November 1.

In the futures market, the gold price touched an intraday high of Rs 47,885 and an intraday low of Rs 47,700 on MCX. For the December series, the yellow metal touched a low of Rs 45,705 and a high of Rs 48,899.

Gold futures for December delivery dipped Rs 169, or 0.35 percent, at Rs 47,734 in the evening trade on a business turnover of 9,088 lots. The same for February dropped by Rs 45, or 0.09 percent, to Rs 47,920 on a business turnover of 5,008 lots.

The value of December and February contracts traded is Rs 1,377.48 crore and Rs 115.49 crore, respectively.

The Gold Mini contract for November edged lower by Rs 132, or 0.28 percent, at Rs 47,770 on a business turnover of 16,489 lots.

Also read: Dhanteras 2021: Light jewellery in demand this Diwali: Malabar Gold & Diamonds chairman

Diwali Gold Outlook

Navneet Damani, VP – Commodities Research at Motilal Oswal Financial Services

We have been bullish and continue to maintain a positive bias for gold price over the next 12 months, and expect that the consolidation is stretched could see some directional move soon. The current scenario could have some short term hiccups which might give investors a better buying opportunity.

We believe that gold has the potential to surge towards $2,000 once again and might even make a new lifetime high on the Comex. On the domestic front, we expect prices to surge towards highs of Rs 52,000-53,000 over the next 12 months.

Hareesh V, Head of Commodity at Geojit Financial Services

"Prices continue to stay firm but unlikely for major rallies in the immediate run. A stronger US currency, optimistic global economic sentiment, and expectations of tapering off stimulus measures by Central banks continue to put pressure on safe assets like gold. Steady equity and limited physical buying from major consumers like India also influencing the short-term outlook of the commodity. However, a weak Indian Rupee and festive season demand would limit major selloffs in domestic prices"

Sugandha Sachdeva VP-Commodity & Currency Research, Religare Broking Ltd

As an investment, we advise buying gold in a staggered manner around Rs 47,400 per 10gms and then adding more around the key level of Rs 46,400 per 10gm level for the target price of Rs 49,500 per 10gms in the near term and next Rs 52,500 per 10gms level from a medium-term perspective, while exercising a caution below Rs 44,000 per 10gms mark.

Also read: Dhanteras 2021: Is it time to go beyond buying physical gold?

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