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"This is equivalent to nearly half an ounce of gold ownership per capita, a figure which is significantly below consumption in Western markets, representing scope for additional future growth", says a WGC research paper entitled 'India: Heart of Gold'.
In 2009, total Indian gold demand reached $ 19 billion, or Rs 974 billion, which accounts for 15 per cent of the global gold market, according to WGC.
Over the past ten years, the value of gold demand in India has increased at an average rate of 13 per cent per year, outpacing the country’s real GDP, inflation and population growth by six per cent, eight per cent and 12 per cent respectively.
The country currently has one of the highest saving rates in the world, estimated at around 30 per cent of total income, of which 10 per cent is already invested in gold.
Eily Ong, Investment Research Manager at the WGC, said: “India is the largest gold market in the world and, as such, the likely recovery of local gold demand to pre-crisis levels is of considerable strategic importance to the wider gold market.
“Gold is an integral part of Indian society and a foundation of wealth and savings in India. As consumers have adjusted their price expectations upwards, a further rise in gold jewellery and investment demand is anticipated and this trend is projected to continue over the long-run as local investors are buying gold driven by wealth accumulation motives,” Ong said.
Gold demand in India is likely to robust and reach near the pre-credit crunch level triggered by global economic crisis in 2009 and will give boost to the imports, the report said.
"India is the largest gold market in the world and, as such, the likely recovery of local demand to pre-crisis levels is of considerable strategic importance to the wider gold market," Ong said.
The report said the current demand trend for the yellow metal suggested a robust year-on-year recovery in imports from the 2009 levels. Gold imports stood at Rs 88,100 crore in 2009, WGC said.
"As consumers have adjusted their price expectations upwards, a further rise in gold jewellery and investment demand is anticipated and this trend is projected to continue over the long-run as local investors are buying gold driven by wealth accumulation motives," he said.
The rise in gold jewellery and investment demand is anticipated and this trend is likely to continue over the long-run as local investors are buying gold mainly driven by wealth accumulation motives.
Despite the rising price investment demand for gold jewellery remained robust emphasising that domestic consumers purchase the yellow metal mainly because of its allure as a hedge to offset the effects of depreciation and erosion of both savings and income, it said.
 Limited.JPG)
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