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Festive Seasons and Domestic Gold Prices, Do they really have any Correlation?

4 Mins read

“We don’t have the time to look out for gifts, let’s just gift some Gold!”

– Family/Relatives

This is one of the phrases which we often hear in Indian families during the festival seasons. If you look at the domestic demand data in general the domestic demand for Gold pumps during the festival season. So, technically the “Law of Economics” should factor in. But to be sure of it we would have to analyse the data a bit. By analysing domestic demand data and domestic prices we will be able to make conclusions on our question i.e. “Do festivals really have an impact on the domestic gold prices?”

The Research Methodology

We will take into account the most relevant Indian festivals, by relevant we mean, the festivals in which the demand for precious metals is the most. Once we have the demand data we then will calculate its correlation with the domestic prices of Gold. But to do that we need to collect the Domestic Demand Data for Gold. Now, this is where the things get tricky.

There is no direct/definite way by which we can get the exact data, we would have to make certain assumptions. The most logical assumption would be to check the impact of seasonality/festivals on Gold ETFs like GoldBeES.

“Why ETFs?” Because if festivals really have any impact on the domestic prices of Gold, then the ETF will show or reflect it because Gold ETFs derive their prices from Indian spot prices.

But to be extra sure, we will also check the international gold prices. If Indian Gold ETFs rise while the International prices stay constant/negative then our assumptions will be justified. Currently, Indian Domestic Demand for Gold does not influence international pricing, however, this might change soon after the IIBX starts to work in full form.

I know all these ETF assumptions might sound a bit, strange, but trust me this is the most realistic assumption. It is better than estimating the gold demand in kilos for all the states because the demand for Gold can vary from state to state.

Indian Festivals in which the Gold Demand is the most

  • Makar Sankranti
  • Akshaya Tritiya
  • Dhanteras(Entire Dipawali period)

These are some of the festivals in which demand is the most, do note that this list is created just on the basis of the fundamentals and some demand data of previous years.

Gold ETF and International Gold Prices during these festivals

We will analyse data from 2015-2022 which is 7 years. We will basically check whether or not, on a particular festival GoldBeES rises with volume. But, the catch is that we will also check the international prices. All we want is a negative correlation between both of them. Below I have compiled the impact of events/festivals during 2015. To further save time, the data for other years(i.e. 2016-2022) have been entered into a table given below.

1. Akshaya Tritiya-2015

On this day from the GoldBeES chart we can clearly see that the volume is phenomenal, also adding to this the candle formed on this day is also mildly bullish. So, this meets our basic criteria, now we have to check the international prices. Surprisingly on the international charts even though the candle was bullish, it did not cross the previous day’s high. However, at the same time in the GoldBeES chart, the candle closed above the previous day’s high. This somehow meets with our research assumptions. Because GoldBeES usually is positively correlated with Spot prices, which are again correlated with international prices. Here we can see that there is a positive correlation, but the quantum of bullishness is higher in the Indian markets. Long story short, we can conclude that this festival had an impact on the prices, but let’s check out other events of 2015.

Chart for Gold- Festivals and Gold relation
Chart for Gold- Festivals and Gold relation

2. Dhanteras-2015

We can clearly see from the charts that the volume picked up a lot on this day, however, there was no significant impact on the prices. The Gold ETF traded with a bullish bias, in fact for most of the day the ETF was up. However, if we compare this to the international charts we do not see anything different. The international prices too were up on this day, the only sign or impact of seasonality is the size of the candle. On the international charts, a relatively smaller candle was formed, which makes it clear that even though the prices were positively correlated but the quantum was stronger in India, just like in Akshaya Tritiya of 2015. Now, since no other event took place on that day we can assume that the difference in the quantum was because of the festival.

Chart for Gold- Festivals and Gold Relation

(Makar Sankranti was not considered because the volume was not high on that day in 2015.)

Other years:-

Event and YearVolumeImpact on Prices and GoldBeES/International-Gold Correlation
Makar Sankranti- 2016ModerateNo Extraordinary Impact, both moved in tandem. (Bullish)
Akshaya Tritiya- 2016HighNo Impact, both moved in tandem. (Bearish)
Dhanteras- 2016High No Impact, both moved in tandem. (Bearish)
Makar Sankranti-2017NAMarket Closed (Saturday)
Akshyay Tritiya-2017HighNo Impact, both moved in tandem. (Bearish)
Dhanteras-2017HighNo Impact, both moved in tandem. (Bearish)
Makar Sankranti- 2018NAMarket Closed (Sunday)
Akshaya Tritiya- 2018HighNo Impact, both moved in tandem. (Bearish)
Dhanteras- 2018HighNo Impact, both moved in tandem. (Bearish)
Makar Sankranti- 2019ModerateNo Impact, both moved in tandem. (Bearish)
Akshyay Tritiya- 2019NAMarket Closed
Dhanteras- 2019HighNo Impact, but intel prices moved up a bit, while the ETF was down.
Makar Sankranti- 2020ModerateNo Impact, both moved in tandem. (Bullish)
Akshaya Tritiya- 2020NAMarket Closed (Sunday)
Dhanteras- 2020ModerateNo Impact, both moved in tandem. (Bullish)
Makar Sankranti- 2021HighNo Impact, both moved in tandem. (Bearish)
Akshaya Tritiya- 2021HighNo Impact, both moved in tandem. (Bullish)
Dhanteras- 2021ModerateSlight Impact, both moved inversely only a bit
Makar Sankranti- 2022ModerateSlight Impact, both moved inversely only a bit
Akshaya Tritiya- 2022NAMarket Closed

After all this data analysis, we can easily conclude that festivals create a buzz in the markets which leads to a spike in the volumes. But it does not impact the domestic pricing a lot. Long story short, international prices are still the dominant forces in the Indian markets. We might see different Goold prices from state to state, but in the generic ETF terms, no impact can be seen. And if we look closely, in 7 out of 15 festivals/events from 2016-2021 Gold fell.


The Festivals do not have any impact on Gold in general terms. This means that the Generic Gold-related assets like ETFs might not show any price influence. But at the same time, physical bullion might become expensive. This is because physical bullion in terms of jewelry is subject to the jewellers policy.

Festive Seasons no doubt increase the liquidity in terms of volume, which is a good thing, but it is not necessary that the event will be backed by soaring ETF prices.

Let’s see, maybe in the future when the IIBX starts to function in, then maybe the events will start to come into the picture.

Happy Trading!

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About author
Shivank Goswami is an independent Multi-Asset Class Investor and Trader. He specializes in analyzing and trading various derivative markets. His articles are primarily focused on simplifying complex financial market concepts. Lately, he has authored an e-book (available on amazon) titled, 'Hedging Bullion Trades- Why Trade Naked, When you can Hedge?' -Title Contribution by- Ms. Adhishwari Singh (Ma'am) The book explores several ways by using which Bullion Traders can Hedge their Bullion Futures positions that too, without using the Illiquid Options segment.
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