Diwali, the Indian festival of lights, is just around the corner and while it means lighting lamps and eating sweets, it also means giving and receiving gold.
In the past few years gold prices tend to rise around Diwali due to the heavy demand but this year a strong U.S. dollar and the probability of a rate hike from the U.S. Federal Reserve has kept the pressure on gold prices.
According to a report in Reuters, gold discounts in India narrowed to the smallest level in nearly nine months with gold dealers offering the metal at $2 an ounce discount to official domestic prices this week, the narrowest since the week ending on January 23.
"Indian gold prices have tightened, rising back above global quotes for pretty much the first time this year," Adrian Ash, head of research at BullionVault told CNBC via email.
"That premium suggests local demand has at last crept back above the glut of supply which has come due to heavy stock building, India's ban on bullion exports, and continued smuggling thanks to the high import duty and new taxation rules.
"But these higher rupee prices are unlikely to impact spot prices for investors, traders or consumers outside India. Supply remains plentiful, and any draw on international supplies would have come in advance."