Gold demand in India, which was up 47% in the July-September quarter compared to a year ago, is expected to increase further in the current quarter on the back of festive and wedding season demand, Somasundaram PR, Regional CEO, India, World Said the Golden Council. The demand for the yellow metal is also likely to pick up further on expectations of higher inflation in the country, he added.
“India’s Q3 2021 gold demand stands at 139.1 tonnes, a jump of 47% over 2020, reflecting a combination of a lower base effect and a return to positive business and consumer sentiments,” he said.
“This appears to be a firm grip on the pandemic, primarily with high vaccination rates and falling infection rates, leading to a strong rebound in economic activity.”
As per the data released by the council, the demand for gold jewelery grew by 58 per cent to 96.2 tonnes, while the demand for bars and coins as investments grew 18 per cent year-on-year.
He said that the softening of gold prices has also generated a lot of interest among the consumers.
According to the WGC report, recycling of gold declined by 50 per cent to 20.7 tonnes, indicating that the consumer has a strong intention to retain the gold rather than sell it.
He added that the upcoming festival and wedding season could be the busiest gold buying season since the start of the pandemic.
With a large number of buyers and investors preferring online purchases, the demand for digital gold has also increased manifold.
“In the coming months, further pressure is expected from rising commodity prices and logistics costs and the RBI has already adjusted its inflation expectations higher. The demand for gold is increasing due to the rise in inflation. Gold is considered as a strong hedge against inflation and the data for decades supports this notion,” he said.
“While we have not made any forecast for the rest of the year, barring any unforeseen twist in the story, we may see a sharp increase in demand in the fourth quarter of 2021,” he said.
India’s Q3 2021 gold demand value rose 37% to Rs 59,330 crore as compared to a year ago.
The value of demand for jewelery increased by 48% to ₹41,030 crore.
In value terms, investment demand for gold grew 19% to ₹18,300 crore in Q3.
The WGC said that total net bullion imports rose 187% to 255.6 tonnes.
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