Income is the primary driver of gold demand.

The World Gold Council (WGC) recently published the India Gold Market Reform and Growth Report. “In 2017, we produced, India’s Gold Market – Evolution and Innovation,” said Juan Carlos Artigas, Global Head of Research-WGC. Much has changed since the study was released.”

The drivers of Indian gold demand can be summarized as follows: econometric analysis suggests that rising income is the most powerful long-term driver of Indian gold demand. This is good news for gold demand because the economy will benefit from a demographic dividend. The IMF predicts a 23% increase in per capita GDP between 2022 and 2026.

However, while being the world’s second largest consumer of gold, India’s per capita consumption is low. In the immediate term, declining household savings rates and agricultural incomes pose hurdles to demand. Although income is the primary long-term driver of demand, it is influenced by a range of other factors, including governmental actions.

Such measures are now lacking in support, as policymakers assess gold demand purely through the lens of imports. Meanwhile, industry initiatives to increase transparency remain disjointed. Building trust and increasing consumer knowledge, together with innovation, will help to improve the image of India’s gold business, boosting domestic demand and allowing it to play an important part in reconstructing household finances in the post-covid era.

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