WGC Regional CEO Somasundaram PR on why 2022 will be a good year for gold

For the quarter ended September 2021, the demand for gold in India jumped 47% year-on-year to 139.1 tonnes, compared with 94.6 tonnes in the year-ago period, and higher than the 123.9 tonnes recorded in the September 2019 quarter. How will the year 2022 prove for gold? Is it a good time to buy? In this exclusive interview with Business Standard’s Puneet Wadhwa, World Gold Council Regional CEO for India Somasundaram PR answered these and more questions. Here are the highlights:
 
Q1. Is there a good time to buy gold for the long-term, or should one just buy and hold irrespective of the levels?

• Since 1980, gold prices have appreciated by 14.3% CAGR
• Prices, monsoon and inflation impact short-term demand
• Income levels impact long-term demand
• Any time is good provided one is buying for the long term

 
Q2. A number of experts have warned against a possible rise in inflation. A recent WGC report indicated investors use gold as an inflation hedge. Can this time be different as there are more lucrative investment avenues available?
 

• Given inflation concerns, investors can look at diversification into gold
• Equities have run up too fast, too soon
• Diverification into gold is recommended

 
Q3. Will investors’ fancy for cryptos dent the overall gold demand?
 

• Cryptos are still unregulated; have risks attached
• Gold is a safe-haven asset

 
Q4. Why would investors flock to gold when its prices over the past few years have gone down?
 

• Gold delivers good long-term returns
• A must for investors in their portfolio

 
Q5. How do you see the prices playing out given how the global central banks, especially the US Fed, tweak their monetary policy?
 

• US dollar strength, interest rates will have a bearing
• ETF flows taper if prices are soft, but consumer demand picks up
• See pick-up in consumer demand if prices dip due to US Fed action

 
Q6. Will the consumer demand in India pick up as well?
 

• Jewellery an explicit investment in India; part of wealth transfer
• As income levels pick up, so will the demand

 
Q7. Demand projection for the September 2022 quarter?
 

• If there are no negative surprises, demand should pick up
• 2022 should be one of the best years for gold

 
Q8. Gold hallmarking has been a sore point between the industry and the government. Have the issues been ironed out?
 

• Mandatory hallmarking was an issue, but it has been resolved
• Bullion exchanges will be a boon for the industry

 
Q9. Digital gold players, according to reports, will see a 5 per cent drop in sales in FY22 as Sebi has banned buying digital gold from stockbrokers effective September 10. What are your views on this?
 

• Sebi has cautioned regulated entities should not deal in unregulated products

Digital gold will grow going ahead