Despite the Covid pandemic and the general slowdown in the economy, gold demand in India surged to 797.3 tonnes worth Rs 340,860 in calendar year 2021, suggesting consumers are still putting their faith in the yellow metal. According to data from the World Gold Council, this is an 81 per cent increase in value compared to demand for 446.4 tonnes of gold worth Rs 188,280 crore last year.
The government had cut tariffs on gold and silver to 7.5 percent from 12.5 percent in the Union budget for 2021-22 to allow people to import more gold into the country through official channels. India, which relies on imports to meet its needs, imported 924.6 tonnes – worth 4.28 lakhcrore – in 2021 compared to 349.5 tonnes in 2020, a 165 percent increase, a major drain on the country’s foreign exchange reserves country. Of the total gold purchased during the year, jewelry demand accounted for 610.9 tonnes worth Rs 261,140 crore, up 96 per cent in value terms. However, investment demand increased by just 45 per cent to 186.5 tonnes worth Rs 79,720 crore.
With the easing of lockdown restrictions in the second half of the year and a successful progress of the vaccination program, economic growth significantly changed consumer sentiment and sparked widespread spending and investment during Dussehra and Dhanteras. This represented a notable recovery as many retailers reported record sales, even exceeding pre-pandemic levels, and imports and exports rose simultaneously. With more weddings but muted celebrations, higher savings, and pent-up demand, the jewelry market rallied.
“The surge in demand, driven in part by pent-up demand in the fourth quarter, is less likely to be repeated this year, although the rebound will continue to set a new normal above pre-pandemic levels. The next few years, beginning in 2022, will be years in which to monitor the impact of policy reform, technology and industry collaboration for gold to become a more transparent, mainstream asset class,” said Somasundaram PR, Regional CEO, WGC. full report