Page 25 - Bullion World Volume 03 Issue 07 July 2022

Physical Investment

Demand For Gold Bars

And Minted Products

At Elevated Prices

Mr Vidit Garg, Director, Kundan Group

It is said, all assets get eroded in value with
time except gold, which never loses its worth
and continues to shine permanently. The
price of gold has increased exponentially
during the past year. The price of 10gm-
24karat gold has increased from approx.
Rs. 64000/- a year ago to Rs. 103000/-
representing an approx. 61% increase.

The obvious question is if with such a high
rise in price, that too during a short period of
time, can the demand sustain?

Gold is considered as a hedge against inflation and in
India, where households are estimated to hold more than Mr Vidit Garg
25000 tons of gold, and gold has intimate relationship with
India's lifestyle and goes back hundreds of years of rich
heritage of our country, elevated price has limited effect
on its physical demand. The slight decrease in the jewellery sector
and demand slackness of June 2025 quarter
Though demand for jewellery has slightly slowed down shall be compensated during the coming
with the increase in price but it is for only a short duration. festival and wedding season in India. In India,
no marriage is complete without exchange of
Indians view gold as a long-term investment, store of value gold ornaments. Further, the continuous good
and shield at the time of economic uncertainty. In India monsoon, resulting in higher farmers income,
gold has inelastic demand. Elevated gold price has on the is set to boost purchases by rural people
other hand led to more purchase for investment purposes notwithstanding elevated prices.
as it is presumed to lead to higher returns, making gold a
more attractive investment option and boosting investment Overall, gold demand in India is expected
demand through gold ETF and coins. A slight decrease to remain the same as in the earlier years
in demand was observed in June 2025 Quarter, (approx. between 700-800 tons in 2025. Even at record
10%) but it is because there had been substantial rise high price levels, Indians are holding on to
during the previous price rise period of March 2025 their gold, reaffirming its status as a prized
quarter, when demand skyrocketed by 170% which asset.
seems to be mainly for investment purposes due to bulk
purchases of gold bars and minted products India firmly believes in the adage "Gold is the
only money, everything else is credit"