What is behind India's renewed love for gold?
2 years, 11 months ago

What is behind India's renewed love for gold?

Business Standard  

Indians will build on their love for gold this year, as pent-up demand heralds a period of robust sales. Gold’s price drop favoured 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 the 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.In 2020, gold demand stood at 450 tonnes. It’s an investment that cuts across the entire socio-economic spectrum and is commonly used as a bride’s dowry in Indian marriages.So, the pandemic and all its related uncertainties could actually accentuate the demand for gold in India.A lot more will be known in the wedding season that starts January 15 across India.We spoke to Sudheesh Nambiath, head of India Gold Policy Centre at IIM Ahmedabad, to understand what the demand for the yellow metal will be like in 2022.Whenever Indian equity markets do well, the demand for gold picks up as well.

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