India's gold consumption is expected to rise further in 2022 after jumping 79% last year as pent-up demand and an improvement in consumer confidence are seen boosting retail jewellery sales, the World Gold Council (WGC) said on Friday.
The country's gold consumption surged to 797.3 tonnes in 2021 and will likely be 800-850 tonnes in 2022, on the back of recovery in consumer sentiments and pent-up demand post Covid-19-related disruptions and the bullish trend is set to continue this year as well, according to WGC, report Business Standard.
WGC in its Gold Demand Trends 2021 Report said India's total gold demand jumped to 797.3 tonnes in 2021, registering a massive 78.6 per cent jump from 446.4 tonnes during 2020.
Indian demand has averaged 769.7 tonnes over the last 10 years.
A rise in consumption by the world's second-biggest gold consumer would help global prices, but could widen India's trade deficit and put pressure on the ailing rupee.
"Muted wedding celebrations due to restrictions mean more savings and that money is flowing into gold," Somasundaram said.
Indian authorities imposed various restrictions on wedding celebrations due to the coronavirus outbreak and some people postponed weddings until 2022, he said.
Gold is an essential part of the bride's dowry in India and also a popular gift from family and guests at weddings.
In December quarter, gold consumption nearly doubled from a year ago to a record 343.9 tonnes as retail purchases were robust during the key Hindu festivals Dussehra and Diwali, the WGC said in a report published on Friday.
In 2021 weddings lifted demand in urban areas, while rural demand was supported by ample monsoon rainfall, which raised crop production, Somasundaram said.
There is greater acceptance at the current price level from Indian consumers, he said.
Local gold prices were trading around 48,000 rupees per 10 grams this week after hitting a record high of 56,191 rupees in August 2020.
Demand for coins and bars, known as investment demand, surged 43% in 2022 to 186.5 tonnes, the WGC said.
"We expect Indian investment demand to remain healthy as we head into 2022. It may receive support from higher inflation expectations and possible weakness in the rupee due to the widening trade deficit," it said.