Delhi, India — As the Hindu festival of Diwali approaches, the bustling marketplaces of Lajpat Nagar in Delhi are alive with activity. Shoppers, drawn by vibrant decorations and enticing displays, flock to jewelry stores, eager to make purchases in a tradition that symbolizes wealth and prosperity.

The recent spike in gold prices, now exceeding $1,440 per 10 grams, has somewhat influenced consumer behavior, but many Indians remain steadfast in their pursuit of gold. Both Diwali and Dhanteras, another auspicious occasion occurring this Saturday, are considered optimal times for acquiring precious metals, prompting crowds to gather in search of gold and silver items.

Despite the soaring costs—gold prices climbing 60% and silver by 70%—the allure of ownership remains strong. Retailers report an increased fear of missing out among buyers who believe prices may continue to rise. Prakash Pahlajani from Kumar Jewels noted a surge in his customer base this year, contrasting the economic impact of rising prices with the cultural necessity of purchasing gold during festive seasons.

Jewelry purchases have adapted to the new economic reality. Many consumers are opting for smaller quantities, and jewelers are responding by creating pieces that appear extravagant but use less material. Tanishq Gupta, another shop owner, explained how he has designed coins that, while made with only 250 mg of gold, are crafted to look substantial. He has also seen increased interest in even lighter options, like 25 mg coins, as consumers seek budget-friendly alternatives without sacrificing style.

A clear trend has emerged this year: a growing number of consumers are investing in gold and silver for financial reasons, rather than simply for adornment. The World Gold Council has reported a significant shift, with investment demand rising from 19% to 35% in the second quarter of this year. The preference for exchange-traded funds and digital gold is also evident, with record inflows seen in September.

The influence of India’s central bank has further complicated the dynamics of gold demand. The Reserve Bank of India has increased its gold reserves, raising its share in foreign exchange holdings from 9% to 14% this year. This strategy aims to provide greater stability amid geopolitical fluctuations and diversify its assets away from reliance on the dollar.

As the festive season unfolds, many industry experts anticipate sustained demand for gold and silver despite the current high prices. Madan Sabnavis, chief economist at Bank of Baroda, acknowledged that while affluent buyers would likely continue their purchases, lower-income families might feel the pinch more acutely.

Consumer feedback reflects this complex landscape. Bhavna, a bride-to-be, voiced her concerns about affording her wedding needs, indicating a palpable shift in purchasing power among various demographics. While some families feel the pressure of current prices and have delayed purchases, the enduring cultural significance of gold suggests a long-term demand will remain.

Experts assert that India’s strong cultural ties to gold, coupled with a history of solid long-term returns on investments, bolster confidence in the market. Households across the nation hold approximately $3.8 trillion in gold, an amount that constitutes nearly 89% of the country’s GDP. This financial asset reportedly enhances the household balance sheets, particularly as overall economic conditions fluctuate.

Even though the glitter of gold may dim slightly amid record prices, many believe the festival season will forge ahead with resilience. The tradition of purchasing gold and silver remains deeply embedded in India’s cultural fabric, promoting a sense of optimism as festivities continue into the new year.