India’s gold imports & prices to rise in 2022

India more than doubled gold imports in 2021 to $55.7 bn. This far surpassed gold imports worth $22 bn in the previous year 2020.The pent-up demand from 2020 due to Covid lockdown, postponed weddings and suppressed festival shopping led to a phenomenal increase in gold buying and thus gold imports, as per a Reuters report. 
While there is a possibility that gold imports could moderate in January this year with the rising cases of Covid-19 which have prompted local authorities across many states to impose restrictions or curfews, it will only ‘grow in the later months.  
Gold prices are indeed expected to rise, due to the impact of the rising Omicron cases. Gold prices are expected to remain high in the medium term and later may show correction with global cues and US Fed rate hike. Importers will try to get an advantage from lower gold prices combined with a stronger rupee.
Despite uncertainties, the gold demand outlook for 2022 will remain healthy with considerable unmet demand still in the market, according to industry leaders. 
In volume terms, India imported 1,050 tonnes of gold in 2021. This is the most in a decade, and far more than double of the 430 tonnes imported in 2020. Also, price correction during early last year made gold more affordable for retail consumers. Local gold prices hit a record high in August 2020 but fell back in March 2021, when monthly imports spiked to a record 177 tonnes. In December, India imported 86 tonnes of gold, slightly more than last year’s 84 tonnes.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished