When gold investors liquidate positions in a violent fashion, gold bulls have traditionally been able to rely on increased consumer demand to support prices. Indian consumers in particular have a reputation of stocking up during gold selloffs for upcoming weddings and other functions where gifting gold is standard.
India is probably the most important county in the world when it comes to gold, and for good reason: Indians are the largest holder of gold in the world; gold is estimated to make up 7% of all Indian household savings; India is currently the largest consumer of gold in the world accounting for approximately 30% of demand; over 90% of India’s gold is imported; from 2001-2011 India’s population grew 17.7%; by 2030 India is expected to be the most populated county in the world (Source: World Gold Counsel, Census of India).
For hundreds of years Indians have relied on gold for savings. In addition, dowry, a payment from the bride's family to the groom's family upon marriage, is usually made in gold.
The Indian marriage season, of around 10 million weddings annually, runs from October to January and April to May. Gold in the form of dowry often accounts for up to 50% of wedding expenses. Gold is traditionally gifted to the bride as well.
Rupee/U.S. Dollar exchange rate from 1973 to present.