The World Gold Council (WGC) sees India’s gold demand witnessing a sharp upswing to top 800 tonnes this year despite the headline inflation being expected to remain far more stubborn across several economies, its Chief Executive Officer David Tait said on Tuesday.

“I do believe inflation has peaked. My expectation is that you will see a topping out of inflation. The headline inflation will drop and I think people’s propensity to consume will recover again”, Tait told businessline in an interview here.

India’s gold consumption in calendar year stood at about 770 tonnes, weighed down by sharp increase in yellow metal prices on the back of geo-political tensions sparked by Russia-Ukraine conflict and rising inflation. Despite strong monetary tightening by major central banks across the world, the headline inflation continued to be much above the comfort zones of monetary authorities in several countries including the US and India.

Central banks’ holdings

To a question on whether he expects central banks around the world to continue buying gold in big way (they bought most gold in 2022 since 1967), Tait said “If their buying was to diversify their holdings, and was to mitigate some geopolitical risk, perhaps, then I would expect them to at least continue at the same pace. It’s hard for me personally to see the geopolitical risks that we see in the world at the moment, abating much next year. 

And if that was the reason they bought it, then I would see a continuation of that trend. However, that being said, the amount that they did buy and have bought over the last year is exceptional by anybody’s standards, frankly, a record. And there’s a logic part of me that says, it will be unlikely to be exceeded, again, but I expect significant purchasing over the next year because like I said, I see the risks ramping up continually at the moment rather than ramping down. And I hope I’m wrong”.

Tait said he expects the Self-Regulatory Organisation (SRO) for Indian gold industry to soon take off. “It is going to happen very soon. This year for sure. It will be a not-for-profit (Section 8) entity with industry participation”, he said.

The SRO is expected to promote Swarna Adarsh Abhiyan (SAA) as an umbrella brand of industry’s best practices. This organisation is expected to build on the work of the SAA initiative – devising code of conduct for every industry vertical, providing certification for members who adopt these codes, engaging with stakeholders across the gold value chain and advocating for best practice.

Powerful message

This self-regulatory organisation would be the conscience keeper of the industry, yet fiercely independent, and membership would be voluntary. However, those businesses which do choose to be members will be sending a powerful message to all their stakeholders: that they are following the high standards set by the SRO, that they have been audited to that effect and that, crucially, they, their goods and their services can be trusted by customers both in India and all over the world.

WGC has already developed a set of Retail Gold Investment Principles, to build trust across the industry and drive demand for gold as a safe and rewarding retail investment.

These principles have been adapted to the Indian market through the SAA initiative, which helps organisations across the gold value chain to assess current performance and strive towards best practices.

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