Gold season, a traditional time of gold buying in India, Asia and the Middle East, can affect the price of gold.
Americans link fall with colorful foliage and a new lunch box, but consumers in many parts of the world see fall as the start of the gold season, a time of year that an increase in demand and the price of gold.
Tied to religious and cultural traditions in India, Asia and the Middle East, gold season began last week with the Muslim holiday of Eid and extends though to the Chinese New Year. Demand for the precious metal is expected to remain high throughout the current season despite record highs in the price of gold as households stretch savings to buy offerings for deities and traditional gifts for loved ones.
An 11-year rally has driven the price of gold above $1,900 an ounce, but the peak price has not discouraged Muslims celebrating Eid, a holiday marking the end of a month-long period of fasting known as Ramadan. Eid is traditionally a period of strong gold buying in the Middle East, according to Goldworth Financial and marks opening day of the gold season.
The Times of Oman reports that households feel compelled to buy gold despite soaring prices because custom dictates women receive gold gifts during Eid.
India’s festival and wedding season began with the September 1 birthday of Lord Ganesh, the Hindu god of wisdom and prosperity, and continues through Diwali, the festival of lights, and the traditional wedding season that closes out the year. Rajesh Exports, India’s biggest jewelry house anticipates demand for gold will be 25 percent higher this year compared to last, reports the website Gold News.
India’s wedding season, alone, has boosted the price of gold every year since 2002. “Every household in India, however, meager their annual income, goes to great lengths to stash up on some gold, silver and precious metal during this time,” said Gold News.
China, like India, shares a strong cultural affinity for gold, according to Advisor Perspectives, and continued strong demand for gold is linked with China’s robust economy. The website reports that gold delivered to the Shanghai Gold Exchange was nearly 15 percent higher in the second quarter 2011 than the same period one year ago.
Demand for gold may be heating up worldwide, but affluent investors in the U.S. are cooling toward gold. Less than 4 percent of Millionaires surveyed in August said they sold investments and purchased gold in the latest market downturn.