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New Delhi: Demand for gold jewellery in India nearly doubled year-on-year in 2021, moving past pre-pandemic levels to reach a six-year high, with demand for jewellery hitting a record high in the fourth quarter of the year, according to 2021 Gold Demand Trends released by the World Gold Council.

Globally, gold jewellery consumption grew 52% in 2021, fully recovering the losses sustained in the previous year, the WGC said in its report released Friday.

India and China are among the top consumers of gold globally. About 60-70% of India’s gold consumption is in the form of jewellery.

In India, demand for gold jewellery jumped 93% to 611 tonnes in 2021. The country also reported record quarterly demand for gold jewellery at 265 tonne in the fourth quarter of 2021.

Demand was fuelled by easing of lockdown restrictions from June onwards and a successful roll out of the vaccination programme. “This boosted consumer sentiment—particularly in urban India," WGC said. Rural demand was supported by normal monsoon rainfall, although crop loss due to floods in the southern states of Kerala and Tamil Nadu impacted rural demand to a degree, it said.

Meanwhile, festivals and weddings, those that were pushed to the second half of the year due to a more severe second wave in the country, also drove up demand in the fourth quarter, it said.

“Weddings boosted jewellery demand further in the quarter. Pent-up demand from weddings deferred during Q2 and re-scheduled for Q4 2021 provided a fillip, as did the higher number of auspicious wedding days in Q4. With higher wedding purchases and a stable price, consumers preferred gold-for-gold exchange," it said.

In fact, heightened demand in India in the December quarter helped drive global gold jewellery demand to 713 tonnes during the quarter—the highest since the second quarter of 2013.

While India led demand for gold jewellery in the fourth quarter, jewellery demand in markets across the globe was stronger year-on-year, the council said in its report.

While the WGC expects jewellery demand in India to benefit from continued improvement in consumer confidence and income levels in 2022, it is likely to face headwinds too.

The latest wave of the pandemic has prompted renewed uncertainty and fresh restrictions on the size of weddings and social gatherings. This will again postpone weddings to later in the year. Likewise, the sharp release of pent-up demand in Q4 is less likely to be repeated to the same degree in 2022, it said.

Meanwhile, demand for bars and coins, largely for investment purpose, was up 43% year-on-year in India at 186.5 tonnes. Annual global bar and coin investment jumped 31% to 1,180 tonnes, aided by record high volumes in the United States and Germany, WGC said.

“Indian investors pounced on gold in the fourth quarter, with demand surging to an eight-year high of 79 tonnes. The strong end to the year helped lift annual investment 43% to 186 tonnes. The price correction later in November gave added impetus to retail investors, who maintained their positive price expectations," it said.

WGC expects the Indian investment demand for gold to remain “healthy" in 2022. “It may receive support from higher inflation expectations and possible weakness in the rupee due to the widening trade deficit. However, it may struggle to maintain the momentum of Q4, given that strength of pent-up demand at that time is unlikely to be repeated," it said.

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