Gold demand in India is at historic lows due to poor demand and high prices
Gold demand in India plunged by 70 per cent during April-June to 63.7 tonnes compared with the same period last year mainly due to the nationwide lockdown to prevent the spread of COVID-19 and high prices, the World Gold Council (WGC) said in a report on Thursday. In terms of value, India's gold demand during the quarter of year was Rs 26,600 crore, down by 57 per cent compared to Rs 62,420 crore in the corresponding period of 2019, according to the report. “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.
The WGC report also said that India's gold demand for the full year 2020 is expected to fall to the lowest level in 26 years with domestic bullion prices hitting a record high and as falling disposable incomes could curtail retail purchases.
"Fast rising gold prices could act as headwinds," Mr Somasundaram said, adding that demand dipped in an atmosphere of fear and uncertainty where weddings were postponed or just turned out to be uncharacteristically quiet and private.
Consumption is generally high during the June quarter due to weddings and key festivals such as Akshaya Tritiya, but lockdown restrictions kept shoppers indoors this year. Moreover, gold prices are currently at a life-time high of over the key milestone of Rs 50,000 per 10 grams.
Mr Somasundaram also said that India's COVID-19 journey in the second half of 2020 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 said.
