Gold prices have been on a tear, of late, with SPDR Gold Shares GLD rallying 17.4% (as of Oct 24, 2019) compared with the S&P 500's 2.9% gain. Heightened tensions related to the U.S.-China trade war in recent months have led to this upsurge.

Thanks to renewed worries of a global growth slowdown, several global central banks have lately been banking on easy money policies. The Fed has cut rates twice this year and may enact a further cut in October. This has subdued the strength of the U.S. dollar and brightened the appeal for most commodities that are priced in the U.S. dollar.

Plus, other uncertainties related to Brexit, the upcoming U.S. presidential election, volatility in oil prices and a broad-based global growth slowdown added to the strength to this safe-haven metal.

In September, Citigroup commodity analyst Edward Morse expected gold to top $2,000 an ounce over the next year or two, marking a roughly 32% surge from its current price of $1,508.70 (read: 5 Reasons to Buy Gold ETFs as Price May Touch $2000).

Diwali Bonanza

To add more shine to the gold story, India's biggest festival Diwali is here. India is one of the largest buyers of gold and the country's average annual demand is around 800 tons, per indiainfoline.com. Dhanteras, the first day of the famous Indian festival Diwali, is today. The occasion is marked by huge gold purchases in India as it is considered auspicious.

Now the question is how heavy gold buying are we going to see from Indian customers this Diwali?

Due to about a 30% jump in gold prices in the last 3-4 months, higher import duty and domestic economic slowdown, Indian gold imports slumped 68% in September, marking a three-year low. This muted sentiment may not give enough boost to sales this year. Gold prices are nearly $260 higher an ounce this October from a year ago.

Still, jewelers in India have high expectations on Diwali for a rebound in demand and some solid sequential growth, though there is an estimate that sales may fall by 20-40% over last year's festive business.

One of the country's top jewelers Senco Gold and Diamonds sees "a surge in demand for jewelry ahead of Diwali and in the ongoing festive season." The company is expecting sequential growth of 30-40% from the previous months, as quoted on economictimes. Several jewelry retail chains have come up to offer discounts. Analysts are of opinion that Indians might buy gold bars now to get rid of the fabrication charges.

Wedding Season Ahead?

Investors should note that with the wedding season in India around the corner, gold prices will have another reason to run. Gifting gold is a deep-seated part of marriage rituals in Indian society as weddings make up about 50% of annual gold demand.