India’s gold demand surpassed the most optimistic expectations for the Q4 fuelled by weddings and festivals and saw double the full-year 2021 demand compared with 2020, according to World Gold Council’s (WGC’s) latest Gold Demand Trends report.
India’s full-year 2021 demand grew 79% to 797.3 tonnes compared to 446.4 tonnes in 2020. In value terms, the country’s gold demand soared 81% to $25.4 billion, WGC noted.
Somasundaram PR, Regional CEO, India, World Gold Council said: “2021 revalidated the strength of conventional wisdom about gold and holds several lessons in revival that will shape policy thinking for years to come. India’s gold demand recovered by 79% to 797.3 tonnes in 2021 chiefly a result of an exceptional Q4 demand of 343 tonnes that surpassed even our most optimistic expectation articulated in Q3 and turned out to be the best quarter in our recorded data series.”
Total gold jewellery demand in India in 2021 was up by 93% at 610.9 tonnes as compared to 315.9 tonnes in 2020. The value of India’s gold jewellery demand in 2021 was $35.3 billion, up by 96% from $18 billion in 2020.
Somasundaram added, “Gold jewellery demand doubled y-o-y in 2021, surging past pre-pandemic levels to reach a six year high of 610.9 tonnes. Record Q4 demand of 265 tonnes fuelled by weddings and festival season underpin the resilience of gold demand following its deep-rooted socio-economic footprint in household finance. With the easing of lockdown restrictions in H2 and a successful progress of the vaccination program, economic growth altered consumer sentiment significantly, triggering spending and investments across the board during Dussehra and Dhanteras. This marked a remarkable recovery with many retailers reporting record sales volumes above even those of pre-pandemic levels and imports and exports rising in tandem. With more weddings yet muted celebrations, higher savings and pent-up demand boosted jewellery market.”
WGC said total Indian investment demand for 2021 was up by 43% at 186.5 tonnes in comparison to 130.4 tonnes in 2020. In value terms, gold investment demand was Rs.79,720 crore, up by 45% from 2020.
Total gold recycled in India in 2021 dropped 21% to 75.2 tonnes as compared to 95.5 tonnes in 2020.
Total gold imported in India in 2021 was 924.6 tonnes as compared to 349.5 tonnes in 2020, an increase of 165%.
Somasundaram noted, “Anecdotally, many manufacturers reported stretched capacities and unusual waiting times, pointing to the robustness of recovery. Gold investment demand in the Q4 also surged to an eight-year high of 79 tonnes, softer prices in November coupled with a positive outlook about future prices addition impetus to retail investments. Digital gold savings also rose impressively due to their ease and safety, a pointer to altering future buying behaviour in investment gold. Annual investment jumped 43% to 186.5 tonnes in India.
India’s Q4 gold demand was at 343.9 tonnes up by 85% as compared to overall Q4 demand for 2020. The country’s Q4 2021 gold demand value was $19.8 billion an increase of 77% in comparison with Q4 2020. Total gold jewellery demand in India for Q4 2021 was up by 93% at 265.0 tonnes as compared to Q4 2020 (137.3 tonnes). By value, India’s Q4 jewellery demand was $15.3 billion, an increase of 85% from Q4 2020.
“For 2022, Covid-19 and its future variants will remain a factor to watch as will price movements in gold, given global concerns on inflation, interest rate and geo-political developments. The spurt in demand that is, in part, a result of pent-up demand in Q4 is less likely to be repeated this year, though the revival will continue to set a new normal above pre-pandemic levels. The next few years starting with 2022 will be years to watch for the effect of policy reforms, technology and industry collaboration to let gold evolve into a more transparent mainstream asset class.”
India’s total investment demand for Q4 2021 was up by 61% at 78.9 tonnes in comparison with Q4 2020 (48.9 tonnes) and grew 55% in value terms to $4.6 billion. The total gold recycled in India in Q4 2021 was 20.0 tonnes, as compared to 21.7 tonnes in Q4 2020. The total gold imported in India in Q4 2021 was 208.4 tonnes, as compared to 166.5 tonnes in Q4 2020.