India's gold demand skyrockets to 797.3 tons in 2021: World Gold Council
- IBEF
- January 31, 2022
According to the World Gold Council, India's gold consumption increased to 797.3 tonnes in 2021, owing to improved consumer optimism and pent-up demand following the Covid-19-related disruptions, and the optimistic trend is expected to continue this year (WGC). India's overall gold demand increased by 78.6% to 797.3 tonnes in 2021, up from 446.4 tonnes in 2020.
WGC Regional CEO, India, Somasundaram PR told PTI, “The year 2021 revalidated the strength of conventional wisdom about gold and holds several lessons in revival that will shape policy thinking for years to come.” He further added, “India's gold demand recovered by 79 per cent to 797.3 tonnes chiefly a result of an exceptional fourth quarter demand of 343 tonnes that surpassed even our most optimistic expectation articulated in the third quarter and turned out to be the best quarter in our recorded data series.” Given global concerns about inflation, interest rates, and geopolitical developments, he believes Covid-19 and its future variations will remain a factor to watch this year, as will gold price changes.
“The next few years starting with 2022 will be years to watch for the effect of policy reforms, technology and industry collaboration to let gold evolve into a more transparent mainstream asset class,” he stated.
Somasundaram estimates that overall gold demand for the year 2022 will be around 800-850 tonnes if the current scenario continues without any major disruptions. The research also stated that jewellery demand in 2021 increased by 93% to 610.9 tonnes, up from 315.9 tonnes in 2020. Gold jewellery consumption doubled year over year in 2021, leaping through pre-pandemic levels to reach a six-year high following a record fourth quarter demand of 265 tonnes, fuelled by weddings and festival season, Somasundaram said. In terms of value, jewellery demand increased by 96% from Rs 133,260 crores (US$ 17.75 billion) in 2020 to Rs 261,140 crores (US$ 34.78 billion) in 2021.
Many firms reported overburdened capacity and unusually long wait times, indicating the resilience of the recovery. Meanwhile, overall investment demand for 2021 increased by 43% to 186.5 tonnes from 130.4 tonnes in 2020, while demand in value terms increased by 45% to Rs 79,720 crores (US$ 10.61 billion) from Rs 55,020 crores (US$ 7.32 billion) in 2020, according to the research. According to WGC data, total gold recycled in India in 2021 decreased by 21% to 75.2 tonnes, down from 95.5 tonnes in 2020. In 2021, India's total gold imports grew by 165% to 924.6 tonnes, up from 349.5 tonnes in 2020.
In the fourth quarter, gold investment demand reached an eight-year high of 79 tonnes, he said, with lower prices in November and a favourable prognosis for future prices boosting retail investments. He added that digital gold savings have increased significantly as a result of their convenience and security, indicating that future buying behaviour in investment gold may change.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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