India's Gold Demand Set to Break Records

India's gold demand gold will rise by nearly 3% annually over the next decade and top 1,200 metric tons a year by 2020, the World Gold Council said in a report Thursday.

By contrast, in 2010, total consumer demand in India was 963.1 metric tons, the World Gold Council reported.

The findings were included a report titled "India: Heart of Gold," which comes on the heels of another WGC report focusing on India in November. The latest research included forecasts from the Center for Monitoring the Indian Economy (CMIE) and contributions from academics and industry experts, specially commissioned by the World Gold Council.

"The rise of India as an economic power will continue to have gold at its heart," said Ajay Mitra, managing director, India and the Middle East, for the World Gold Council. "India already occupies a unique position in the world gold market and, as private wealth in India surges over the next 10 years, so will Indian demand for gold."

The CMIE forecasts that India's annual real gross domestic product will grow at over 10% from 2010-15, before slowing to an average rate of around 8.4% until 2020

Along with growth, India will face socio and demographic challenges due to its immense diversity, Mitra said.

"This also applies to the gold market," Mitra said. "Nevertheless, gold purchasing will continue, underpinned by India's long-standing and deep cultural affinity for gold; a love affair which transcends generations and makes India unlike any other gold market."

The report shows that at a total of 18,000 metric tons, Indian households hold the largest stock of gold in the world. Gold purchases in India accounted for 32% of the global total in 2010.