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Gold demand is expected to keep improving in India

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(Kitco News) - The World Gold Council (WGC) has predicted that gold consumption in India will probably be the best in at least a decade in the current quarter as buyers stocked up for festivals in November and the peak wedding period.

Indians buy gold gifts and ornaments as the yellow metal is considered auspicious and a bringer of luck and prosperity. After the pandemic nationals with disposable income looked for some safe-haven investments and looked for a store of value as times felt uncertain. Sales increased in jewelry stores and premiums increased.

P. R. Somasundaram, regional chief executive officer for India at the council said “Weddings have come back in a big way. Almost every day there are weddings,”

Imports have been larger this year and prospects for overseas purchases remain positive as jewelry manufacturing continues to be very high, he said, adding “as of now it appears we will have another strong quarter of imports and demand.”

The outlook for consumption in 2022 remains strong unless there is another wave of the coronavirus in the country, he said.

With very little mining and modest levels of recycling, India is heavily reliant on bullion imports to meet domestic demand. About a third of the imports are in the form of gold ore for processing by the country’s 32 refineries, which face a challenge sourcing the ore as most don’t have assured suppliers, often relying on aggregators, Somasundaram said.

Gold has moved away from its most recent high and this represents a discount for the consumer. Today gold is trading at around $1782/oz and oscillated around the $1800/oz figure. Physical demand from India and China remains crucial for propping up the price and statistics are showing there is still a growth in retail demand. 



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