Despite a challenging year for investors, India remained the largest country for gold demand in 2011. During the year, the country bought 933.4 tonnes gold. From the total, jewellery accounted for over 500 tonnes and investment demand reached 366 tonnes.
Though India remains the biggest consumer of gold, the demand for the precious metal declined in 2011 from 1,006.3 tonnes in 2010. According to the World Gold Council, due to high prices and challenging economic conditions, India experienced a reduction in tonnage in 2011.
"Strong intrinsic and emotional affinity towards gold in India will continue to fuel demand over the coming year," says Ajay Mitra, managing director, Middle East and India, World Gold Council.
Apoorv Wadhwa, vice president, Unicon Commodities, is also bullish on gold. "Triggered by the ongoing Euro debt crisis and high inflation, gold prices can touch the level of Rs 32,000 per 10g in the current year," he says.
Not everyone is bullish on the precious metal. "Due to stability in dollar and chances of improvement in the Indian stock market, gold prices are likely to remain range-bound in 2012," says Madan Sabnavis, chief economist, CARE Ratings.
The price of gold surged around 32 per cent in 2011 to Rs 27,102 per 10g on the Multi Commodity Exchange. On 14 February 2012, the metal was trading at Rs 27,745 per 10g on the commodity exchange.