Indian gold demand remains firm according to the WGC
The Indian CEO of the World Gold Council (WGC) has been on the wires discussing his thoughts on the Indian gold market.
P.R. Somasundaram said that demand was affected by the pandemic due to lockdowns and the lack of weddings but there has been an increase in demand.
He noted, In the last quarter of 2021, there was a spurt in demand as the festivals and weddings came back. Savings rates in India were higher as expenditure was down. He added even equities markets performed well but gold played its part very well.
In regards to central bank buying Somasundaram noted the RBI has also been buying gold. He said central bank buying does not move local market sentiment. India is driven by weddings and savings rates into gold.
On the subject of the ongoing COVID-19 pandemic he said Fortunately, the 3rd COVID wave in India has not affected demand as the population starts to learn to live with the virus.
There is also a cloud hanging over the gold market in India as there are some reforms coming. Gold reforms in India (electronic gold receipt) this has good potential to affect bullion banking in a positive way. International bullion exchange could affect the taxation part. Overall the legitimization is thought to be a good thing over the long term.
On the subject of total gold demand at the moment, it stands at around 700 to 800 tonnes per year but ETF's only make up around 40 tonnes. So where in the west analysts have been looking at ETF outflows in India it is not as pertinent.
Lastly, Somasundaram was asked about the gold vs crypto debate. He said "Gold buying in India has not been affected by crypto, people understand when you hold crypto you hold a high-risk asset."
Source: https://www.kitco.com/news/2022-01-19/Indian-gold-demand-remains-firm-according-to-the-WGC.html
