India should prepare for a huge demand break-out in gold, says Somasundaram PR of World Gold Council

High prices have caused a softness in demand, but Somasundaram predicts a huge rise in demand as prosperity increases. One of the reasons for this is significant organisation in jewellery retail

New Delhi: Gold remains undeterred as a commodity of national importance despite all-time high prices, said Somasundaram PR, Regional CEO – India of World Gold Council, summing up the context of gold today at the India Gold and Jewellery Summit 2024 in New Delhi.

“We have lifetime high prices amidst very high interest rates and the stock market is booming. This is generally not heard of. We generally have gold doing very well when something else doesn’t do well. However, RBI is buying lots of gold. Last year, they bought 1000 tonnes of gold. Up until September, they have bought close to 800 tonnes of gold,” said Somasundaram. 

High prices have caused a softness in demand, but Somasundaram predicts a huge breakout in demand as prosperity increases. “As more Indians come out of the lowest rung of the economy, they will buy more gold. We have already seen that a 1% increase in income leads to a corresponding increase in demand. We will probably have close to 1200 tonnes of gold in the next couple of years,” he added.

One of the reasons why India will see a demand rise is a significant organisation in jewellery retail. Ten years ago, the country didn’t have mandatory hallmarking or a free trade agreement such as the CEPA with UAE. Neither did anyone expect GST to be streamlined so successfully, and as the economy changes, the Indian jewellery industry needs to create its own priority list for the coming decade, observed Somasundaram. 

“Priorities can be sublime imports, stagnant demand, high taxes, skills not matching the dream of becoming a one-stop destination for any jeweller, funding and other major concerns. As organised retail grows with brands getting funds from the stock market and public, we see IPOs launched and that leads us to a gradual integration to the mainstream market,” he maintained.

He added that GJEPC should take the lead to enable the next stage of gold reforms in this digital age. Talking about self-regulation, Somasundaram concluded his speech by stating that a self-regulatory organisation by WGC is in the pipeline. “The self-regulatory body will go public soon. There will be an advisory board wherein WGC will invite all jewellery association chiefs to strengthen the common cause of transparent practices pan-India,” he said.

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