Research library

With very little mining and modest levels of recycling, India is heavily reliant on bullion imports to meet its domestic demand. Indian official imports have continued to grow despite high import duty with official imports averaging 760t over the last decade.

Today, China’s gold industry is at a crossroads; leading stakeholders are asking where it will go next. We believe the consideration of three questions will help set the course for the industry over the next three to five years.

With an annual demand of approximately 800-900 tonnes, the size of the Indian gold market is second only to that of China. Despite its significant size and important global position, the Indian gold market is unable to realise its potential due to multiple challenges.

In 2015 India was the world’s fast growing economy; in recent years millions have been lifted out of poverty and India’s middle class has swelled. This is important because our econometric analysis indicates income growth drives gold demand. 

China has gone through remarkable change in the past 30 years. Within one generation, the shape of our economy has altered beyond all recognition: agriculture’s share of output has fallen and the service sector has become an important driver of growth.

Gold coins are intrinsic to gold demand, not just in India, but across the world. In most countries that have an affinity with gold however, that relationship is symbolised by a sovereign gold coin.

India has an ambivalent relationship with gold. For consumers, gold is a prized asset, cherished as both an adornment and an investment. For the government, gold is a major contributor to the current account deficit, a challenge that needs to be addressed.

The World Gold Council has announced it is convening a gold industry forum to explore reform of the London Gold Fix. The first meeting will be held on the 7th July in London.

The report examines the factors that have driven China’s rise to become the number one producer and consumer of gold since the market began liberalising in the late 1990s and consumers were first allowed to buy gold.

This report looks at the future of the gold market in India. It puts in context the market for gold, and examines the strategic outlook for the Indian economy and gold demand over the next decade. There is short discourse on the mythological and cultural significance of gold in India as well as detailed econometric analysis of Indian gold demand from 1980 to 2009.