Urban Indians look forward to a golden Diwali this year

Goldhub blog

Urban Indians look forward to a golden Diwali this year

Mukesh Kumar
Senior Analyst, India
World Gold Council

Posted:

Festive spending intent up y-o-y for urban Indians 

Weddings and festivals are important drivers of gold demand in India. And according to a recent YouGov survey, urban Indians intend to spend more during Diwali than they did last year.1 YouGov’s Diwali Spending Index jumped to 90.71 compared to 80.96 in 2020.2 The survey found that 29% of urban respondents plan to spend more this year than last – a significant increase from 17% in 2020. Shopping opportunities were severely curtailed during the pandemic and these urban consumers are looking forward to splurge during the upcoming festival (Chart 1). 

 

Chart 1: Diwali spending sentiment has improved in 2021

Survey Question: Thinking about Diwali this year, do you plan to spend more or less than what you spent last year?


Source: YouGov Survey

Urban Indians plan to buy gold during Diwali  

When asked about which items they would like to buy in the next three months, smart home appliances were top of mind, with 37% of urban investors ranking this as their first choice. Looking at gold, 28% mentioned that they would like to spend on gold in the next three months (Chart 2), with Millennials (aged 25-40) more likely than other age groups to spend on gold.

 

Chart 2: 28% of urban respondents are planning to spend on gold in the next three months 

% of urban respondents planning to spend on any of the below categories in next three months


Source: YouGov Survey 

The motives for buying gold vary across age groups  

The survey highlighted that 58% of urban respondents plan to purchase gold for personal/family use either in physical form or through a gold scheme (such as Tanishq Golden Harvest Scheme), and 38% plan to buy gold for investment purposes either through gold funds or in physical form. Across the age groups Gen X are more likely to buy gold for personal use while Gen Z and millennials are more likely to buy gold for investment purposes (Chart 3).

 

Chart 3: Purpose of investing in gold indicated by different generations 

Question: You indicated you are planning to spend on gold in next three months. Could you indicate what kind of spends these are likely to be?


Gen Z: 17-24 year olds, Millennials: 25-40 year olds, Gen X: 41-45 year olds. 
Source: YouGov Survey

Looking at the geographical split, respondents in the south of the country are more likely to buy gold jewellery and invest in gold saving schemes while those in the north are keen to invest in gold through mutual funds or buy physical gold. Hallmarking is the most important consideration when deciding where they will buy their gold (61%) followed by cost per gram (45%) and obtaining a proper receipt for their purchase (35%). 

Economic upturn and gold hallmarking should lift festive gold demand

 In the wake of higher vaccinations and easing of lockdowns economic activity has started to recover. In turn, gold retail demand is set to make its own recovery during Diwali this year. And the implementation of mandatory hallmarking will improve transparency and further boost gold demand during the festival. The survey by YouGov points towards a stronger consumer sentiment in 2021 as compared to 2020 but it is yet to match pre-pandemic levels as respondents continue to be concerned about their finances and the uncertainty created by the pandemic.

 


Footnotes

1Diwali is considered an auspicious occasion for gold purchases. Diwali falls on 4 November 2021.

2YouGov’s survey was conducted on a sample of 2,000 respondents on YouGov India’s online panel during August 2021. The sample primarily consists of consumers from NCCS A and B, and matches the population numbers of urban India in terms of basic demographics like age, gender, regions and city tiers.

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