Demand for gold in India will continue to grow and is likely to reach 1,200 tonnes or approximately Rs 2.5 trillion by 2020, at current price levels, according to a research by World Gold Council (WGC).

“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,” the WGC Managing Director for India and the Middle East, Mr Ajay Mitra, said in a statement here today.

India’s gold demand has grown 25 per cent despite 400 per cent price rise of the rupee in the last decade, making the country a key driver of global gold demand, the research said.

Gold purchases in India accounted for 32 per cent of the global total in 2010. Further, the council expects an increase by over 30 per cent in real terms.

“India’s continued rapid growth, which will have significant impact on income and savings, will increase gold purchasing by almost 3 per cent per annum over the next decade,” the council said in a statement.

It added: “In gold terms, India is a market with significant scale. In 2010, total annual consumer demand reached 963.1 tonnes. As seen in the last decade, Indian demand for gold will be driven by savings and real income levels, not by price.’’

According to Mr Mitra, 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,” he said.

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