JOHANNESBURG - The bullion price lost its shine yesterday (Tuesday) on the eve of Diwali, the Hindu festival, which is biggest festival on the Indian calendar.
Diwali coincides with the Hindu New Year and the triumph of good over evil and will be celebrated tomorrow (Thursday) by millions worldwide. Zimbini Peffer, the head of marketing at TFG Jewellery, said there was a spike in local sales ahead of Diwali.
“As American Swiss, we look forward to celebrating this amazing occasion with our customers every year. During Diwali, we see up to a 30% sales increase in Gold Special Occasion jewellery,” Peffer said.
About 1.22 percent, or 551669, of the South African population professed to be Hindu, according to the 2001 census and primarily reside in KwaZulu-Natal. This is the largest concentration of Hindus in Africa after Mauritius.
The South African Hindu community buys gold jewellery mainly as wedding gifts. A member of the local Hindu community, who spoke on condition of anonymity, said “In India Hindus buy gold jewellery to mark Diwali. We do not follow that tradition in South Africa. We buy mainly clothing and costume jewellery not gold,” she said.
She added that the South African economy was struggling and people did not have excess cash with which to buy gold jewellery. “The majority of the Hindu population is based in Durban, but most are poor,” she said.
India is the world's the second biggest gold consumer after China, however, Diwali would not make a difference in the price of the bullion, Rene Hochreiter, a mining analyst at Johannesburg-based NOAH Capital Markets said yesterday.
“Gold is a safe haven from geopolitical tensions. Demand and supply changes may affect the gold price only for a few days, if any,” he said. The spot price of gold declined by 0.4 percent to trade at $1 282.59 an ounce yesterday owing to the firmer dollar.
While demand for gold ahead of Diwali in South Africa is not key to gold sales, in India, the festival drives sales.
Somasundaram PR, the managing director for the World Gold Council in India, said that gold was at the centre of festivities and gifting traditions in India, particularly during Diwali and the wedding season that follows.
He said that the gold demand in India was recovering after the withdrawal of the anti-money laundering guidelines on jewellery buying. “Policy reforms in quick succession in recent years have targeted transparency and the industry is transitioning under goods and services tax to a more organised structure, with long term benefits,” he said.
He also said that it appeared that demand for gold jewellery and branded coins seemed to be better than the past quarter.
“A good monsoon and stable gold prices are definitely encouraging consumers to make token purchases for the auspicious festival. The ensuing wedding season, however, holds the key for the quarterly demand performance,” he said.
Chirag Sheth, a metals focus research consultant for South Asia, said that there was a recovery in demand for gold in India ahead of Diwali.
Sheth said that the growing interest in gold demand was on the back of the decision by the Indian government to withdraw an order that brought the industry under anti-laundering legislation.
- BUSINESS REPORT