For every 1% increase in Inflation, gold demand In India increases by

 For every 1% increase in Inflation, gold demand In India increases by 2.6%, highlights World Gold Council Report

  The World Gold Council today launched a report titled ‘The drivers of Indian gold demand’, the first in a series of in-depth analysis on the Indian gold market. Using an econometric model, it draws on three decades of annual data, dating from 1990 to 2020, to gauge some of the principal influences driving gold demand in India.

The report assesses gold demand from a range of perspectives, both quantitative and qualitative. It considers the findings of a comprehensive analysis of the long- and short-run determinants of Indian gold demand and examines demographic, socio-economic, and related developments that are likely to shape gold demand in the country, now and in the future.

The econometric analysis shows that rising income is the most powerful driver of Indian gold demand in the long term, which bodes well for Indian gold demand as the economy is complemented by a strong demographic dividend. However, Indian demand faces short-term challenges from declining household savings rate and agricultural wages. It is also impacted by policy measures support which is currently lacking as policy makers view gold demand solely through the prism of imports. Additionally, the report highlights that the industry efforts towards improving trust, transparency and consumer awareness need to be more cohesive.

Somasundaram PR, Regional CEO, India, World Gold Council, commented; “Our latest research reinforces the fact that the drivers of gold demand in India are many and varied. Cultural affinity, long-held tradition and festive gifting clearly play significant role. However, these qualitative factors are complemented by quantitative aspects, which have jointly shaped India’s demand for gold over the last three decades, such as household income, the gold price, and inflation, which is a key issue facing investors in India today. The report is based on a comprehensive econometric analysis that highlights the most potent drivers of Indian gold demand in the short and long term. It further delves into aspects of Indian demographics and economic development at a crucial juncture, helping us understand gold demand today as well as in the future. We, at the World Gold Council, are confident that these findings will shape industry strategy around reinforcing established conventions and developing new ways to attract and sustain demand in the future”.

 

The report finds -

All else being equal, three key factors influence consumer demand for gold over the long – term.

• Income: for each 1% increase in gross national income per capita, gold demand rises by 0.9%.
• Gold price level: for each 1% increase in the rupee- based price of gold, demand falls 0.4%.
• Government levies: import duties and other taxes affect long-term demand, but the magnitude varies depending on whether gold is bought as jewellery or bars and coins.

 

Key econometric factors that influence short-term demand for gold are

 

• Inflation: in common with investors around the world, Indian savers turn to gold as a hedge against inflation. For each one percentage point increase in inflation, gold demand increases by 2.6%.
• Changes in the gold price: while steady price increases or decreases affect long-term demand, sharp price changes have an impact on short-term demand. For each 1% fall in the gold price in any given year, demand increases by 1.2%.
• Tax regime: an increase in the rate of import duties since 2012 has depressed demand for gold by 1.2% per year.
• Excess rainfall: a while the monsoon has less of an impact on demand than in the past, it still affects consumer behaviour. A 1% increase in rainfall, compared to the long-run average, boosts gold demand by 0.2%.

 

Outlook for future gold demand in India

 

1. Demand for gold may be more subdued than expected this year, following India’s prolonged battle with COVID-19
2. However, imports remain strong and retail demand is expected to pick up, as restrictions are gradually lifted across the country
3. In 2022, economic growth and the impact of pent-up demand for gold are likely to herald a period of robust demand, although any future outbreaks of coronavirus could create further uncertainties
4. Looking ahead, it would appear that if the industry takes steps to become more transparent, more standardised and more in line with global peers, India’s gold market would most likely benefit from positive demographics and socioeconomic changes.

 

3 focus areas which would allow gold to retain its long-held position as a valued asset across India

 

1. Trust: Mandatory hallmarking, good delivery standards for gold bars and a gold spot exchange will drive a sea change in the Indian gold market, building trust among consumers and investors alike
2. Education and awareness: An orchestrated campaign explaining how to buy gold could inspire many potential gold investors, especially if this included products that accommodate small incremental investments. Explaining moves in the gold price, on television for example, might
3. Innovation: Digital tools, such as online platforms, robo-advisors, mobile applications, and e-commerce platforms, will drive accessibility and put gold on a par with other investment assets

Regional preferences, population shifts and gold

• In general, jewellery demand is more influenced by long-term drivers while demand for gold bars and coins tends to respond more sharply to short-term factors, such as inflation or tax.
• Consumption patterns also differ between rural and urban consumers. Jewellery is considered both an investment and adornment in rural areas. City dwellers tend to consider bars and coins as their preferred forms of investment.

You can follow the World Gold Council on Twitter at @goldcouncil and Like on Facebook.

‘You are gold’ campaign launched to

                ‘You are gold’ campaign launched to allure youth towards gold jewellery

The World Gold Council today unveiled a multi-media campaign in partnership with Gem & Jewellery Export Promotion Council (GJEPC) to increase awareness, relevance and adoption of gold jewellery amongst young Indian consumers. The integrated campaign that will be rolled out in two phases through 2021, aims to attract millennials and gen-Z by building a meaningful context of role of gold jewellery in their contemporary expressions.

Deriving from insights that indicate an opportunity to increase resonance for gold amongst the youth in the country, the ‘You are gold’ campaign aims to evoke emotions and creative self-expressions through heart-warming stories of celebratory moments. The campaign attempts to ingrain gold in the millennial culture through relevant stories that revolve around relationships and milestones that deserve to be cherished with gold. The essence of  campaign - every moment that makes you, YOU, deserves to be celebrated with gold - is captured effectively with the phrase 'You are gold'. The campaign infuses a modern meaning in the classic narrative of gold, creating a new age culture that respects and embraces tradition but reinterprets it in contemporary ways – akin to the true millennial approach. The first burst of campaign will span for six weeks, followed by a second burst in October-November, coinciding with the festive period.

Somasundaram PR, Regional CEO, India, World Gold Council said, “Gold jewellery has always been at the centre of celebrations of the most cherished moments in life. For the millennials, this horizon has expanded to embrace moments of self-expression and individuality, marked by spontaneity. It is time for the narrative of gold jewellery to evolve and align with the changing mindset of the Indian consumers. Millennials represent a sizeable demographic segment and they are redefining India’s consumption story. The idea behind this campaign is to reinforce the relevance of gold jewellery in a meaningful way by demonstrating its contemporariness and versatility, it tells the story of today’s millennials and inspires them to celebrate their most treasured life moments with gold.”

Colin Shah, Chairman, GJPEC said, “Gold jewellery ticks all the right boxes for today’s value-conscious and image conscious young women. The “You are Gold” campaign aims to appeal to their hearts and minds and will hopefully make gold jewellery a relevant means of self-expression. Its purpose is to make gold jewellery an extension of her personality. The campaign celebrates the Indian heritage and craftsmanship but with a contemporary twist -- something that will be cherished by millennials and Gen Z as future heirlooms. The campaign would bring alive the modernity and versatility of gold to consumers reinforcing the value of gold.”

The commercial has been directed by an award-winning Indian film director and producer Shoojit Sircar. The creative partner for the campaign is McCann Worldgroup and the media partner is Motivator, GroupM

McCann Worldgroup Mumbai spokesperson said, “The campaign 'You are Gold' we have envisioned for World Gold Council is a very today’s, modern narrative. It all stemmed from a beautiful challenge. How do we make the millennials fall in love with gold! The campaign therefore attempts to find a role for gold in the millennial culture. Inspiring, short stories take a fresh approach on relationships and moments. It celebrates the new meaningful milestones in a millennial’s life. This campaign will leave you with a lingering image of beautiful and cherished moments. The moments that deserve to be celebrated with gold”.

It is an integrated multi-media campaign with multiple films that will be released one-by-one across different channels over next few months. The media mix includes television, digital, social and OTT platforms (for example, Disney+ Hotstar) to ensure campaign reaches, inspires and resonates with the millennials and Gen Z audiences.


Link to advertisement: - https://www.youtube.com/watch?v=lfiSseK3tHU   

The campaign website: www.youaregold.in  

Director: Shoojit Sircar

Creative agency: McCann Worldgroup

Media agency: Motivator-Wavemaker, GroupM

Producer: Supriya Macwan

Associate Producer:  Madhukar Moses

DOP: Kamaljeet Negi

World Gold Council and GJEPC Enter into Strategic Partnership for

World Gold Council and GJEPC Enter into Strategic Partnership
for Generic Gold Jewellery Marketing in India

 The World Gold Council and Gem and Jewellery Export Promotion Council (GJEPC) have signed an agreement to promote gold jewellery in India in 2021. Under the terms of the agreement, both partners will jointly fund a multi-media marketing campaign that would aim to increase awareness, relevance and adoption of gold jewellery amongst Indian consumers, especially millennials and gen Z.

 The World Gold Council’s ‘Retail Gold Insights: India Jewellery’ report released last year revealed that although young women are active gold jewellery consumers (33% of Indian women aged 18-24 years bought gold jewellery in the 12 months preceding the survey in 2019), their future purchase intent could be higher. This is especially true in the urban areas and could be achieved if the gold jewellery trade could tap into consumers’ desire for self-expression and prestige.

 This finding presents an opportunity for the gold industry to work collectively to make gold jewellery more relevant and contemporary, leading to a consequential shift. This joint partnership will work to make gold jewellery more relevant and desirable through an evocative multi-media campaign.  

Somasundaram PR, Regional CEO, India, World Gold Council, commented on the partnership: “The Indian gold jewellery market is an astonishing blend of craftmanship and creativity, symbolising centuries-old manufacturing skills that have shaped our passion for gold. However, buying habits are constantly changing and marketing efforts of many products create a strong appeal addressing consumer instincts for experiences and instant gratification. Indian gold jewellery linked largely to planned buying for traditional occasions, may be missing a crucial link to many other life-worthy moments that younger audiences cherish. We are working together with GJEPC to create this crucial link. Together we will work on a campaign that amplifies a universal message about gold in one’s life whilst positioning Indian hand-made jewellery in a very modern context.  This should spur the Indian gold jewellery industry to act in unison to compete at the top end of the curve in the evolving consumer preferences, and create a strong global influence as a jeweller to the world. Through shared goals and an aligned mission, the World Gold Council looks forward to a successful partnership with GJPEC in supporting the Indian gold industry through this generic category campaign by showcasing the cutting edge, modern contemporary gold jewellery to our consumers.”

Colin Shah, Chairman, GJEPC, commenting on the partnership said , “GJEPC is delighted to collaborate with World Gold Council (WGC) for the Nation-wide campaign to promote gold jewellery. The objective is to develop a sustainable model for an industry led initiative to drive growth for Gold Jewellery in the market; maintain high desirability & drive consumption amongst consumers in India. I am confident , WGC’s broad experience and deep knowledge of the factors driving market change, will certainly help craft a campaign that will drive gold jewellery consumption among the millennials and Generation Z consumers. I believe that, while there is a renewed interest in handcrafted gold jewellery, we need creative solutions to match the contemporary woman’s aesthetic sensibilities. We are moving towards the age of personalisation and self-expression, and desirable gold jewellery designs have to address that need. The campaign would bring alive the modernity and versatility of gold to consumers reinforcing the value of gold.”

Milan Chokshi, Convener, Promotions, Marketing & Business Development, GJEPC said, “Although reverence for gold in India goes back centuries, being woven into mythology, sacred ceremonies and weddings, of late we have seen an emotional disconnect from gold among the Millennials and Gen Z. Making gold relevant to them is the underlying aim of this campaign supported by the GJEPC and World Gold Council.  What better metal than gold to create heirlooms for the future, crafted with ancient techniques that are linked to our rich history, but articulated with a modern design lexicon so as to inspire the new generation. And the cherry on the cake is gold’s undisputed intrinsic value that only rises with each generation.”

 McCann has been appointed as the creative partner and Motivator, Group M has been appointed as the media partner for the marketing campaign that will be rolled out in next few weeks in India.

You can follow the World Gold Council on Twitter at @goldcouncil and Like on Facebook.

A weak fourth quarter sets the seal on 11-year low for

 A weak fourth quarter sets the seal on 11-year low for annual gold demand

The COVID-19 pandemic, with its far-reaching effects, was the driving factor behind gold consumer demand weakness throughout 2020, leading to a 14% decline in annual demand to 3,759.6t.[1] Last year was the first sub-4,000t year since 2009 according to the World Gold Council’s latest Gold Demand Trends report.

Global gold demand dropped by 28% y-o-y to 783.4t in Q4, making it the weakest quarter since the midst of the global financial crisis in Q2 2008.

Gold jewellery demand in Q4 fell 13% y-o-y to 515.9t, resulting in a full-year total of 1,411.6t, 34% lower than in 2019 and a new annual low for our data series. While demand improved steadily from the severely depleted Q2 total, the coronavirus continued to impact consumer behaviour.

Conversely, increased uncertainty and policy response to the pandemic supported annual investment demand, which increased 40% y-o-y to a new high for our series of 1,773.2t. Most of the growth came in the form of gold-backed ETFs (gold ETFs) but was aided by bar and coin demand growth in H2. In addition, evidence suggests that over-the-counter (OTC) activity, which is not directly captured in our data set, was also robust throughout the year. However, in Q4 there was a notable decline in investment demand for gold ETFs with outflows totalling 130t.

 Total annual gold supply also took a hit and was 4% lower y-o-y (4,633t), the largest annual fall since 2013. The drop can be largely explained by coronavirus-related disruption to mine production, offset by a marginal 1% increase in recycling to 1,297.4t for 2020.

Inflows into global gold ETFs reached an annual record of 877.1t (US$47.9bn). An 11-month consecutive run of positive inflows starting in December 2019 came to a halt in November when a recovery in sentiment and gold price drop led to 130t of outflows in Q4.

The US dollar gold price returned 25% in 2020 supported by investor demand. After reaching a record high in August across most currencies, the LBMA Gold Price PM dropped back to US$1,762.55/oz at the end of November, before recovering to close the year at US$1,887.6/oz.

Demand for gold bars and coins grew 10% in Q4. A recovery in China and India in the second half of 2020 added to continued strength in Western markets to lift annual demand to 896.1t (+3%).

2020 marked a record low of 1,411.6t for gold jewellery demand. Despite a quarterly recovery in Q4, demand was unable to overcome the continued challenges presented by COVID-19.

Gold buying by central banks slowed sharply in 2020, 59% lower at 273t. Q4 saw a return to modest net buying: global official reserves grew by 44.8t during the quarter, more than reversing the 6.5t of net sales from Q3.

Louise Street, Senior Markets Analyst, Research at the World Gold Council, commented: “The impact of the COVID-19 pandemic was felt across the gold market throughout 2020, and Q4 was no different. Consumers around the world remained at the mercy of lockdowns, economic weakness and high gold prices, resulting in a new annual low in jewellery demand.

“Nevertheless, despite outflows in Q4, gold-backed ETFs saw record annual inflows due to low interest rates and high levels of uncertainty, highlighting gold’s role as a safe haven asset. Bar and coin demand also saw a strong recovery in the second half of the year, showing that retail investor sentiment remained relatively stable in these volatile markets. Overall, we believe the effects of the pandemic are likely to reverberate into Q1 2021, and possibly beyond.”

The key findings included in the latest Gold Demand Trends report for FY 2020 are as follows:

 Annual demand (excluding OTC) declined to 3,759.6t (-14%), the first sub-4,000t year since 2009

• Record gold ETF inflows totalled 877.1t (US$47.9bn) and global AUM reached 3,751.5t
• Gold bar and coin demand grew 3% in 2020 to 896.1t
• Global jewellery demand declined by 34% y-o-y to 1,411.6t, a new annual low
• Central banks gold buying slowed in 2020, 59% lower y-o-y at 273t
• Demand in the technology sector fell by 7% in 2020 to 307.9t
• Mine production declined 4% y-o-y
• Recycling increased only marginally by 1% y-o-y

 The key findings included in the latest Gold Demand Trends report for Q4 2020 are as follows:

 Overall demand in Q4 declined by 28% year-on-year to 783.4t

• Gold-backed ETF saw outflows of 130t in Q4
• Gold bar and coin continued to see strong demand and increased by 10% y-o-y
• Global jewellery demand continued to improve from the record low in Q2 but was 13% lower year-on-year at 515.9t
• Central banks returned to net buying, adding 44.8t to global holdings
• Demand in the technology sector grew marginally to 84t

The Gold Demand Trends Q4 & FY 2020 report, which includes comprehensive data provided by Metals Focus, can be viewed at http://www.gold.org/research/gold-demand-trends.

You can follow the World Gold Council on Twitter at @goldcouncil and Like on Facebook. 

Survey highlights that 29% of retail investors in India have never

Survey highlights that 29% of retail investors in India have never bought gold but are open to buying it in future

The World Gold Council’s latest India Retail Investor Insights report revealed that 29% of retail investors have never bought gold in the past but are open to the idea of buying gold in the future. 52% of investors already owned some form of gold, with 48% having invested in the 12 months preceding the survey. Gold jewellery and gold coins remained two of the top five investments held by Indian investors across the board – a position that has been a permanent fixture for some years.

India’s gold market is one of the largest and most well-established in the world, augmented by the nation’s traditional affinity and age-old cultural associations with gold. This is further substantiated as gold also occupies a prominent role in investment portfolios - the investment case for gold is ingrained in India, protecting wealth and generating long-term returns for rural and urban investors alike.

The main five key findings from the report are as follows:

A clear rural/urban distinction exists. Gold currently has a deeper penetration among urban investors: 76% of this group have invested in gold in the past. And 21% are open to buying gold in the future, having never previously invested. On the contrary, 37% of rural investors would consider buying gold in the future despite never having done so before. And while these rural gold considerers offer a lower value opportunity than their urban counterparts, they offer significant growth potential.

There is a common need for simplicity and reassurance. There are shared attributes between rural and urban investors, key among which is a desire for simplicity and reassurance from their investments. The gold industry is well poised to capitalise on this need by highlighting gold’s relevant attributes to unlock a portion of this latent demand.

Gold is struggling to find a foothold at certain key investment occasions. There are a number of universal demand moments, defined by the specific set of needs to which investors are responding when they make an investment choice. Today, gold falls short in meeting the needs of investors on some of these occasions. There are ways in which the industry could raise gold’s profile: emphasising its role as a low-risk wealth protection vehicle would help in certain moments; while in others, developing accessible gold products packaged in a more exciting way would attract demand.

Trust and education are key barriers for those yet to invest in gold. There is a significant pool of investors who have never previously bought gold but would consider doing so in the future. The primary hurdles in reaching this audience are a lack of trust in gold, a need for education around investing in gold, and reassurance in its risk profile. But there is, nonetheless, a sizable opportunity to increase penetration of gold investment among the Indian retail investor base. In total, almost one third of Indian investors who have not bought gold before are open to doing so in future. We call this group ‘gold considerers’ and they represent a significant pool of untapped demand

Our global consumer survey report ‘Retail gold insights 2019’ revealed that a lack of trust was a key challenge for gold across six key markets: 48% of global considerers were deterred from buying gold due to a lack of trust. The data for India shows it to be a far bigger issue here than elsewhere: 61% of Indian considerers identified issues around trust as a barrier to buying gold.

The gold industry has the potential to appeal to a sizable new audience. Technology can play a key role in opening up new avenues for gold investment; easy online accessibility is a must in this era of increasing global digitisation.

Somasundaram PR, Managing Director, India, World Gold Council, commented: “India’s retail investment landscape is evolving, underpinned by government-led financial inclusion programmes, the surge of fintech, and increasing investor knowledge. And this clearly affects the gold industry. Businesses are constantly striving to leverage technology to make gold more accessible to retail investors. To help the gold industry better understand the market we conducted an in-depth survey of more than 2,000 retail investors. Basis this in-depth survey, we have been able to uncover broad insights, extending across the entire purchase journey, delving into demand moments and identifying investor typologies. One statistic that leaps out to me and captures my imagination is that 29% of retail investors have never bought gold in the past but are open to the idea of buying gold in the future. We welcome deeper conversations with the industry to explore how we can help to realise that potential.”

Few key issues addressed in the India Retail Investor Insights report are as follows:  

1. Trust: 61% of those that have never bought gold in the past but will consider buying in the future said that a lack of trust in the product or industry is a barrier to purchase. The World Gold Council is working with the industry to address this, recently launching the Retail Gold Investment Principles (RGIPs) and collaborating with the industry to operationalise these to build trust in the eyes of potential gold investors.

2. Education and awareness: 65% of potential gold investors said they have gaps in their knowledge around gold; for example, rural considers cited lack of understanding of what drives the gold price as a barrier (29%) while for urban considerers, perception that gold is unaffordable was the main barrier (29%). Common to both groups was the lack of knowledge of how to buy gold - 23% considerers identified this as a barrier to investing, stating that the process of buying was too difficult or opaque.

3. Innovation: India’s gold industry is jewellery-led; it is both beautiful and a sound investment. But as the retail investment market evolves, so too must our industry. These insights will help businesses to understand retail investors better and to tailor new products or delivery strategies that meet their needs. Only through innovation can the industry thrive.

The report also deep dives into insights concerning other facets critical to the industry’s growth such as financial inclusion, understanding the behaviour and attitudes of different types of retail investors, the role of gender in urban and rural India, and the rise of financial technology, among others. There is a clear scope to work collectively as an industry to make it easier for investors to understand gold and the gold buying process through tailormade solutions and innovations, helping the industry thrive.

Methodology:

Building upon the World Gold Council’s 2016 survey, this research programme’s survey was conducted in partnership with global research agency, Hall & Partners. The study captured the opinions of more than 12,000 global active retail investors, gathering insights into retail investment via a quantitative survey of at least 2,000 men and women (aged 18 to 65) in China, India, Germany, the US, Canada and Russia. Within India, 1005 face-to-face interviews were conducted with rural investors and 1,280 online interviews conducted with urban investors. Fieldwork surveys took place in Q2 and Q3 2019.

The India Retail Investor Insights report can be viewed at www.retailinsights.gold.