Coronavirus takes sheen off gold demand in India
Jewellery demand falls to 44 tonne Jewellery demand in value terms plunges to `18,350 crore Gold recycling down 64% to 13.8 tonne
Mumbai: Gold demand in India plunged 70 per cent during the April-June quarter to 63.7 tonne compared with the same period last year mainly due to the nationwide lockdown to prevent the spread of Covid-19 and high prices, according to a World Gold Council (WGC) report.
This is the second lowest quarter after the first quarter (January-March) of 2009 when, soon after the Lehman crisis, demand for gold in India fell to 40 tonne. Overall gold demand in the country was 213.2 tonnes during the second quarter of 2019, WGC said in its 'Q2 Gold Demand Trends' report.
In terms of value, India's gold demand during the second quarter of this year was Rs 26,600 crore, down by 57 per cent compared to Rs 62,420 crore in the corresponding period of 2019. The total jewellery demand in India for the second quarter of 2020 decreased by 74 per cent at 44 tonnes compared to 168.6 tonnes in the same quarter of 2019. Jewellery demand, in value terms, fell by 63 per cent during the April-June this year at Rs 18,350 crore from Rs 49,380 crore in the corresponding period last year. Total gold recycled in the country also saw a decline of 64 per cent during April-June quarter at 13.8 tonnes from 37.9 tonnes in Q2 of 2019 as refineries were closed due to the nationwide lockdown. Similarly, total gold imports in India in Q2 2020 sank 95 per cent to 11.6 tonnes during the quarter compared to 247.4 tonnes in Q2 2019 due to no movement.
"The second quarter of 2020 was defined by lockdowns and high prices, both of which acted in combination to keep India's gold demand record low at 63.7 tonnes, down 70 per cent," WGC Managing Director, India, Somasundaram PR said. Sales trend during the window of opportunity, afforded by relaxation of lockdown in select cities, do point to healthy latent demand that should surface once Covid-19 turbulence is behind us, he added.
"Overall, gold demand in India in H1 2020 was 165.6 tonnes, plummeting 56 per cent in comparison to H1 2019 ," he stated. Going forward, he said, India's Covid-19 journey in H2 will chart the course and pace of economic revival of which gold demand is an integral part.
"A sense of optimism is developing amongst trade, however, that, by Dhanteras, Covid-19-related disruptions may matter less as society learns to live with it, with a possible upside following some positive news on treatment.
"This should spur consumer confidence, and jewellery demand will play a big role in bringing things to normalcy. Fast rising gold prices could act as headwinds though," he added.