India’s gold demand rose 79 per cent to 797.3 tonnes in 2021 driven by an 85 per cent jump in the fourth quarter volume with pent-up demand and softer prices driving sales. Demand in the coming years is expected to normalise around 800-850 tonnes, according to the World Gold Council.

Jewellery demand during the quarter was at 610.9 tonnes, up 93 per cent, compared with the corresponding quarter in 2020. Investment demand at 186.5 tonnes was up 43 per cent year-on-year.

Total gold imported in 2021 was 924.6 tonnes compared with 349.5 tonnes in 2020, an increase of 165 per cent. Total gold recycled in the country in 2021 was 75.2 tonnes compared with 95.5 tonnes in 2020, a drop of 21 per cent.

“Gold jewellery demand doubled year-on year- in 2021, surging past pre-pandemic levels to reach a six-year high of 610.9 tonnes. Record fourth quarter demand of 265 tonnes, fuelled by weddings and festival season, underpin the resilience of gold demand following its deep-rooted socio-economic footprint in household finance,” said Somasundaram PR, regional CEO-India, World Gold Council.

“With the easing of restrictions in the second half and a successful progress of the vaccination programme, economic growth altered consumer sentiment, triggering spending and investments across the board during Dussehra and Dhanteras,” he said.

“How central banks globally deal with persistent high levels of inflation will be a key factor for institutional and retail demand for gold in 2022,” said Louise Street, senior analyst, EMEA at the World Gold Council.

“For 2022, Covid-19 and its future variants will remain a factor to watch as will price movements in gold, given global concerns on inflation, interest rate and geo-political developments,” Somasundaram said.

“The spurt in demand that is, in part, a result of pent-up demand in the fourth quarter is less likely to be repeated this year, though the revival will continue to set a new normal above pre-pandemic levels," he added.

Global gold demand for 2021, excluding over-the-counter trades, increased to 4021 tonnes, propelled by the fourth quarter demand that jumped almost 50 percent to 1147 tonnes, highest quarterly level since second quarter of 2019.

“We expect similar dynamics to influence gold’s performance in 2022 with demand drivers fluctuating according to the relative dominance of key economic variables,” Louise Street said.