Gold Prices Surge in October Festive Demand and Global Factors Drive the Rally
Gold’s Rapid Ascent in October
The price of gold has seen a remarkable surge so far in October, with substantial gains observed. In New Delhi, gold prices per 10 grams were INR 57,550 on October 3, but by October 27, they had climbed to INR 62,000, marking a significant increase of INR 4,450. This significant rise comes at a time when the festive season, including Diwali and wedding ceremonies, leads to increased demand for jewelry.
Festive Season and Wedding Demand
The surge in gold prices is attributed to the Indian tradition of buying gold during the festive season and as part of wedding customs. With Dhanteras falling on November 10 this year, many consumers are making gold purchases, which have propelled prices higher.
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International Market Impact
The increase in the price of gold is not limited to domestic markets; it’s also making waves in international markets. In recent weeks, international gold prices have crossed the $2,000 per ounce threshold, marking an increase from around $1,900 per ounce. The escalating geopolitical tensions and the Israel-Hamas conflict are contributing factors to the surge in gold prices in global markets.
Jewelers Expect Strong Demand
Jewelry retailers anticipate sustained demand for gold during the festive season. Along with cultural traditions, the continued need for jewelry during weddings keeps the demand for gold high. Consequently, gold prices might further increase.
Foreign Portfolio Investors Withdraw from Indian Equities
The volatile equity markets have driven foreign portfolio investors (FPIs) to withdraw funds from Indian equities. FPIs have pulled out a total of INR 20,356 crore from equity markets up to October 27. However, they have invested INR 6,080 crore in debt markets during the same period.
Top Companies Witness a Decrease in Market Capitalization
In the past week, the market capitalization of the top ten companies listed on BSE has seen a decline of INR 1.93 lakh crore. TCS saw the largest reduction, with a decrease of INR 52,580.57 crore. Other prominent companies, including HDFC, Reliance Industries, Infosys, Bharti Airtel, Bajaj Finance, ICICI Bank, ITC, Hindustan Unilever, and SBI, also witnessed reductions in their market capitalization.