Indian gold demand grew 25% cent last year to 963.1 tonnes, according to a research report that reaffirms India as a key driver of global demand.
According to GulfNews.com, consistent with what has been seen in the last decade, Indian demand for gold will be driven by savings and real income levels and not by price.
The value of the Indian rupee has surged 400% in value in the last decade.
Indian gold demand also boosted sales in the UAE's gold market — a key source for the Indian market.
The World Gold Council research shows that by 2020 cumulative annual demand for gold in India will increase in excess of 1,200 tonnes or approximately Rs2.5 trillion in value at current price levels.
India's continued rapid growth will give a shot in the arm to gold purchases by almost three per cent per annum over the next decade.
Indian demand for gold will be driven by savings and real income levels and not by price, the report said.
Ajay Mitra, Managing Director, India and the Middle East, World Gold Council, said: "The rise of India as an economic power will continue to have gold at its heart. India already occupies a unique position in the world gold market and, as private wealth in India surges over the next ten years, so will Indian demand for gold."
"In parallel to growth, socio and demographic challenges will need to be addressed given its immense diversity. This also applies to the gold market. Nevertheless, gold purchasing will continue, underpinned by India's long-standing and deep cultural affinity for gold; a love affair which transcends generations and makes India unlike any other gold market."
A detailed historical and econometric study by Dr Kannan finds that India's gold demand is influenced not only by the price of gold, but by macroeconomic, monetary and policy variables .
• At more than 18,000 tonnes, Indian households hold the largest stock of gold in the world. •Gold purchases in India accounted for 32% of the global total in 2010. •The CMIE forecasts that India's annual real GDP will grow at over 10% from 2010-15, before slowing to an average rate of around 8.4% until 2020. •The vast majority of the Indian population (70%) live in villages, which have traditionally formed the source of more than two thirds of Indian gold demand. •This sector has been growing at less than one per cent per annum but is projected by CMIE to grow in future at over 5% per annum, further fuelling gold demand. • The motivation for a jewellery purchase can be inextricably linked to value, wealth preservation and growth rather than pure adornment - there is therefore little distinction between investment and jewellery demand. •Gold is integral to all Indian wedding ceremonies: purchases relating to Indian weddings typically account for 50% of annual jewellery demand • The World Gold Council estimates that wedding-related purchasing will drive approximately 500 tonnes a year. --Source: GulfNews.com