India imported 1,050 in gold worth ($55.7 bn) in 2021, more than double of 2020. Last year's gold import surpassed the high recorded in 2011. Find out what is behind India's renewed rush for gold?
Indians will build on their love for gold this year, as pent-up demand heralds a period of robust sales. This was the main finding in the World Gold Council’s recent report – The Drivers of Indian Gold Demand.
The report stated that imports remain strong and retail demand was expected to pick up when pandemic restrictions were lifted across the country. Data from the previous year illustrates this point.
India spent a record $55.7 bn on gold imports in 2021, buying more than double the previous year’s tonnage. The 2021 gold import bill also surpassed the previous high of $53.9 bn in 2011. Gold’s price drop favored retail buyers and there was strong pent-up demand for weddings in October last year.
“Rising incomes are one of the biggest single drivers of long-term gold demand. This suggests that as India’s economy grows, demand for gold should increase,” the report stated.
However, a fall in employment numbers, particularly salaried employment, and a poor consumer sentiment index could seriously affect the sale of yellow metal in India.
This is at a time when Omicron-variant of Covid infection is rising across the country.
Nevertheless, India’s strong gold consumption in 2021, and the expectation that its price may recover to Rs 55,000 per 10 gm from near Rs 49,665 now, amid pandemic woes, inflation worries, and a stronger US dollar, could definitely cause a strong uptake in the demand for gold this year in India.
Recent data also suggests that since the pandemic-induced slowdown, the demand for gold is on the rise in India.
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