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Explained: India’s Gold Demand During Diwali

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India's gold demand during diwali

India’s Gold Demand During Diwali

In India, gold’s significance goes far beyond investment and jewelry. The yellow metal is woven into India’s cultural history and is revered by a population of over 1.3 billion.

India is one of the largest markets for gold consumption, with jewelry, bars, and coins accounting for the bulk of annual demand. Indian gold demand typically peaks between October and December on the back of Diwali, the festival of lights, followed by thousands of weddings.

But why do Indians buy gold during Diwali?

Gold’s Significance During Diwali

Indians consider it auspicious to purchase gold—a symbol of wealth, purity, and prosperity—on many festive occasions, and Diwali is the biggest one of them.

Diwali is a five-day festival that celebrates the triumph of good over evil and light over darkness, based on Hindu mythology. For many Indians, this festival is associated with welcoming good luck, positivity, and prosperity.

People often dedicate gold purchases during Diwali to deities, especially Lakshmi, the goddess of wealth. Gold is also a popular festive and wedding gift at this time of the year.

India’s Record Gold Demand in Diwali 2021

India’s gold consumption in the second half of every year is typically higher than in the first half, coinciding with Diwali in October (beginning of Q4), according to data from the World Gold Council.

YearGold Jewelry, Bar, and Coin Demand
(tonnes)
YoY % Change
H1 2010447N/A
H2 2010555N/A
H1 201159032.1%
H2 2011384-30.8%
H1 2012404-31.5%
H2 201251032.7%
H1 201355737.9%
H2 2013402-21.3%
H1 2014370-33.5%
H2 201446315.3%
H1 2015350-5.5%
H2 20155079.5%
H1 2016229-34.5%
H2 2016437-13.9%
H1 201736358.4%
H2 2017408-6.6%
H1 2018341-6.2%
H2 20184202.9%
H1 20193729.2%
H2 2019318-24.2%
H1 2020166-55.5%
H2 2020281-11.8%
H1 202128572.3%
H2 202151282.3%
H1 20223067.3%

Following a significant drop in demand in 2020, Indians bought a record amount of gold jewelry in Q4 2021 at 265 tonnes, worth $15.3 billion at the time. Overall, gold jewelry, bar, and coin demand in H2 2021 saw an 82% increase year-over-year.

This increase was largely driven by the festive season and pent-up demand from subdued celebrations and consumption in 2020. As of the first half of 2022, gold demand was up 7.3% relative to 2021.

With Diwali celebrations in full swing, will India see another record quarter for gold demand? It remains to be seen, with gold’s festive tailwinds likely to meet economic headwinds in the form of uncertainty and higher import duties.

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Visualizing Global Gold Production in 2023

Gold production in 2023 was led by China, Australia, and Russia, with each outputting over 300 tonnes.

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Graphic breaking down global gold production in 2023

Visualizing Global Gold Production in 2023

This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.

Over 3,000 tonnes of gold were produced globally in 2023.

In this graphic, we list the world’s leading countries in terms of gold production. These figures come from the latest USGS publication on gold statistics (published January 2024).

China, Australia, and Russia Produced the Most Gold in 2023

China was the top producer in 2023, responsible for over 12% of total global production, followed by Australia and Russia.

CountryRegion2023E Production (tonnes)
🇨🇳 ChinaAsia370
🇦🇺 AustraliaOceania310
🇷🇺 RussiaEurope310
🇨🇦 CanadaNorth America200
🇺🇸 United StatesNorth America170
🇰🇿 KazakhstanAsia130
🇲🇽 MexicoNorth America120
🇮🇩 IndonesiaAsia110
🇿🇦 South AfricaAfrica100
🇺🇿 UzbekistanAsia100
🇬🇭 GhanaAfrica90
🇵🇪 PeruSouth America90
🇧🇷 BrazilSouth America60
🇧🇫 Burkina FasoAfrica60
🇲🇱 MaliAfrica60
🇹🇿 TanzaniaAfrica60
🌍 Rest of World-700

Gold mines in China are primarily concentrated in eastern provinces such as Shandong, Henan, Fujian, and Liaoning. As of January 2024, China’s gold mine reserves stand at an estimated 3,000 tonnes, representing around 5% of the global total of 59,000 tonnes.

In addition to being the top producer, China emerged as the largest buyer of the yellow metal for the year. In fact, the country’s central bank alone bought 225 tonnes of gold in 2023, according the World Gold Council.

Estimated Global Gold Consumption

Most of the gold produced in 2023 was used in jewelry production, while another significant portion was sold as a store of value, such as in gold bars or coins.

  • Jewelry: 46%
  • Central Banks and Institutions: 23%
  • Physical Bars: 16%
  • Official Coins, Medals, and Imitation Coins: 9%
  • Electrical and Electronics: 5%
  • Other: 1%

According to Fitch Solutions, over the medium term (2023-2032), global gold mine production is expected to grow 15%, as high prices encourage investment and output.

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Charted: The Value Gap Between the Gold Price and Gold Miners

While gold prices hit all-time highs, gold mining stocks have lagged far behind.

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Line chart comparing gold price and gold mining stocks since 2000.

Gold Price vs. Gold Mining Stocks

This was originally posted on our Voronoi app. Download the app for free on Apple or Android and discover incredible data-driven charts from a variety of trusted sources.

Although the price of gold has reached new record highs in 2024, gold miners are still far from their 2011 peaks.

In this graphic, we illustrate the evolution of gold prices since 2000 compared to the NYSE Arca Gold BUGS Index (HUI), which consists of the largest and most widely held public gold production companies. The data was compiled by Incrementum AG.

Mining Stocks Lag Far Behind

In April 2024, gold reached a new record high as Federal Reserve Chair Jerome Powell signaled policymakers may delay interest rate cuts until clearer signs of declining inflation materialize.

Additionally, with elections occurring in more than 60 countries in 2024 and ongoing conflicts in Ukraine and Gaza, central banks are continuing to buy gold to strengthen their reserves, creating momentum for the metal.

Traditionally known as a hedge against inflation and a safe haven during times of political and economic uncertainty, gold has climbed over 11% so far this year.

According to Business Insider, gold miners experienced their best performance in a year in March 2024. During that month, the gold mining sector outperformed all other U.S. industries, surpassing even the performance of semiconductor stocks.

Still, physical gold has outperformed shares of gold-mining companies over the past three years by one of the largest margins in decades.

YearGold PriceNYSE Arca Gold BUGS Index (HUI)
2023$2,062.92$243.31
2022$1,824.32$229.75
2021$1,828.60$258.87
2020$1,895.10$299.64
2019$1,523.00$241.94
2018$1,281.65$160.58
2017$1,296.50$192.31
2016$1,151.70$182.31
2015$1,060.20$111.18
2014$1,199.25$164.03
2013$1,201.50$197.70
2012$1,664.00$444.22
2011$1,574.50$498.73
2010$1,410.25$573.32
2009$1,104.00$429.91
2008$865.00$302.41
2007$836.50$409.37
2006$635.70$338.24
2005$513.00$276.90
2004$438.00$215.33
2003$417.25$242.93
2002$342.75$145.12
2001$276.50$65.20
2000$272.65$40.97

Among the largest companies on the NYSE Arca Gold BUGS Index, Colorado-based Newmont has experienced a 24% drop in its share price over the past year. Similarly, Canadian Barrick Gold also saw a decline of 6.5% over the past 12 months.

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