Gold-buying headed for best Diwali in 4 years: Here's why

There is a silver lining to the decline in gold prices: A five-week long fall in cost of the yellow metal leading into the festive season has come in handy for Indians waiting to splurge. And it's likely to spur the best Diwali in four years for jewellery sales.
The fall in prices to below Rs 30,000 per 10g has brought buyers back into the market; the technical-minded would note a decline below the important support level of the 200-day moving average. Others are just bringing out their cash and credit cards.

A clear sign that buyers are back is the shrinkage of discounts to a near 9-month low, compared to an all-time high earlier this year.

The pickup in demand is not a surprise, given that the last quarter of the calendar year is punctuated by festivals and weddings, and is a time when buying gold is considered auspicious. But it's significant if you recall that the retail trade had stayed away in the first six months of the year, put off by a 25 percent run-up in prices; Indian imports fell by half in the same period.

These are several factors behind the resurgence in demand.

1. It's auspicious - buying during this period is considered auspicious. Indians believe that whatever is bought during this period leads to prosperity.
2. Good rains - the best monsoon in three years means better income. Two-thirds of gold demand still comes from rural India and it's a key driver this time round.
3. Offers and Discounts - they may have come down but are still generous, from waivers of making charges to freebies and free gift vouchers. Easy exchanges and membership packages also are galore. Cash back offers and discounts range from 5 to 45 percent.
4. New launches - the season features special collections from jewellers and a long-list of designer launches by many big names in the industry.
5. Region-specific plans -- jewellers are also taking a region-specific approach, with designs chosen to cater to sensibilities in a particular part of the country.
6. Online choices - many online jewellery stores are making big pitches with their inventory, designs and offers, 24X7 viewing and orders, spoiling you for choice.

The All India Gems and Jewellery Trade Federation estimates sale of gold jewelry to grow 40 percent in value and 20 percent in volume this season. The other associations also believe that this is slated to the best Diwali in 4 years in terms of gold jewellery sales.