Geopolitical Crisis, De-dollarisation, Tech Advancements Boost Gold Demand: WGC's Sachin Jain

Factors such as de-dollarisation and geopolitical conflicts, including the ongoing Russia-Ukraine war and rising tensions in the Middle East, continue to drive demand for gold as a stabilising asset, said Sachin Jain, Regional CEO India of the World Gold Council, on Wednesday.

Interestingly, he added that advancements in technological production and consumption have further spurred demand for gold.

"We see almost a 7 to 10 per cent increase in gold consumption for technological products every quarter. This is largely driven by electronics and AI-based chips, which represent a new trend. We also anticipate this growth to continue as artificial intelligence becomes increasingly significant," Jain remarked.

In an interaction with ANI, Jain noted that India has experienced a shift in its gold investment landscape. The Reserve Bank of India (RBI) has increased its gold reserves, with average quarterly purchases of approximately 18 tonnes. Additionally, the government's July 22 policy decision to reduce gold import duties has boosted the organised market and curtailed smuggling.

Addressing a question on investors' behaviour, he highlighted variations in demand for different gold assets. "Bars and coins have shown rapid growth in both the second and third quarters," he observed.

However, Jain reported that jewellery demand dropped by around 17 per cent. After the duty reduction, the jewellery market saw a revival in August, leading to what Jain described as "a mini Diwali" for the bullion sector.

Jain added that interest in bars, coins, and even ETFs has surged, with gold ETFs in India gaining popularity.

"I foresee ETFs and gold ETFs becoming increasingly popular," he said.

Looking ahead, Jain expressed cautious optimism, stating, "All factors influencing gold prices are currently very favourable. From geopolitical issues to domestic consumption and the asset class return value, each of these elements has been quite strong."

Jain further noted that India's gold market has seen strong demand during the festive season of Dhanteras, countering earlier concerns that high prices might reduce enthusiasm.

Speaking on the festive season, Jain mentioned that despite gold approaching the 80,000-rupee mark recently, which had raised concerns among industry players about reduced footfall, demand has shown resilience. (ANI)