India's gold consumption is expected to increase further in 2022 after having jumped 79% last year as pent-up demand and consumer confidence are seen boosting retail jewellery sales, the World Gold Council WGC said on Friday.
In 2022, the gold consumption will likely be 800 -- 850 tonnes compared to 797.3 tonnes last year, the highest in six years, said Somasundaram PR, regional chief executive officer of WGC's Indian operations.
Indian demand has averaged 769.7 tons over the last 10 years.
A rise in consumption by the world's second biggest gold consumer would help global prices, but could cause a widening of India's trade deficit and put pressure on the ailing rupee.
More savings and money flowing into gold are the result of muted wedding celebrations due to restrictions, according to Somasundaram.
He said that the Indian authorities imposed various restrictions on wedding celebrations due to the coronaviruses outbreak and some people postponed weddings until 2022.
Gold is an important part of the bride's dowry in India and is also a popular gift from family and guests at weddings.
In December, gold consumption almost doubled from a year ago to a record 343.9 tonnes, as retail purchases were robust during the key Hindu festivals Dussehra and Diwali, the WGC said in a report released on Friday.
In 2021 weddings lifted demand in urban areas, while rural demand was supported by ample monsoon rainfall, which increased crop production, Somasundaram said.
He said there was greater acceptance from Indian consumers at the current price level.
The local gold prices were trading around 48,000 rupees per 10 grams this week after hitting a record high of 56,191 rupees in August 2020.
Demand for coins and bars, known as investment demand, increased by 43% in 2022 to 186.5 tonnes, according to the WGC.
It said that it may get support from higher inflation expectations and possible weakness in the rupee due to the widening trade deficit.