Pandemic lockdowns have canceled many gatherings such as Diwali and marriage. Those are the two most celebrated events in India. After months of isolation, job loss, and survival hardship, gold consumers soar to blowout the delayed events. In the Indian market, gold demand has shown its ultimate power that no matter how hard the situation is, Indians would never stop buying gold.
2021 was the first record breaking of the highest gold sales in the history of the continent. The World Gold Council tracked the record starting from 2005. The satisfaction of demand in 2021 was equal to 340 tonnes of gold or almost the same with five healthy elephants each week. No wonder that India is the second largest yellow metal after China.
Custom and tradition should be the main key to gold soaring demand. Golds are for brides’ jewelry and dowry. Then, during certain festivals, Indians tend to put gold as accessories. Apart from those events, Indians also have wisdom passed through generations. Gold is a valuable saving. During difficult situations, people tend to sell their jewelry.
Gold assets also rose from 32% to 61% respectively in 2020. When the gold price rises, people would sell their gold. The positive side from the Russia war also gave an impact to gold price. The price is rising to a new record.
The problem however lies here, India does not produce any gold domestically. As a result it relies on importing gold. Theoretically, too many gold imports can hamper economic stability. The government has tried to control the import demand by applying a 10% tariff. It also watches the market more from smuggling issues. Although many regulations applied for importing gold, massive demand of gold especially from rural India is unstoppable.
