India's gold demand up 19% in April-June quarter at 76 tonne: WGC
- IBEF
- July 30, 2021
The World Gold Council (WGC) said in a study that India's gold demand surged by 19.2% to 76.1 tonne in the April-June quarter of this year, owing to a low base effect caused by the national shutdown that impacted economic activity last year. According to the WGC's 'Gold Demand Trends Q2 2021' report, global gold demand in the second quarter of the 2020 calendar year was 63.8 tonnes.
In terms of value, India's gold demand increased by 23% in the April-June quarter, to Rs. 32,810 crore (US$ 4.41 billion), compared to Rs. 26,600 crore (US$ 3.51 billion) in the same quarter of 2020.
However, once the second wave of COVID-19 struck the country, demand dropped by 46% quarter-over-quarter, according to the research.
"Demand in H1 was 157.6 tonnes, down 46% from H1 2019 and 39% lower than the H1 average from 2015 to 2019," according to WGC statistics.
"As a result of an increase in COVID infections, the second quarter of 2021 was distinguished by widespread regional lockdowns." Compared to the previous year, when a countrywide shutdown caught businesses off guard, this quarter was better because firms were more prepared.
"Demand in Q2 2021 increased 19.2% year over year on a very low base of Q2' 2020," WGC Regional CEO, India, Mr. Somasundaram PR said. "However, the impact was severe as its dampened demand throughout Akshaya Tritiya and wedding season in Q2," he added.
According to the study, total jewellery demand increased by 25% in the second quarter, reaching 55.1 tonnes, up from 44 tonnes in the same quarter previous year.
In terms of value, jewellery demand increased by 29% to Rs. 23,750 crore (US$ 3.19 billion), compared to Rs. 18,350 crore (US$ 2.47 billion) in the same period previous year.
Total investment demand in the country grew by 6% in the second quarter, reaching 21 tonnes, up from 19.8 tonnes in April-June 2020.
In value terms, gold investment demand increased by 10% to Rs 9,060 crore (US$ 1.21 billion) in the first quarter of 2020, compared to Rs. 8,250 crore (US$ 1.11 billion) in the same period of 2020.
In the second quarter of 2020, India recycled 19.7 tonnes of gold, up from 13.8 tonnes in April-June 2020, a 43% rise.
According to WGC statistics, India's gold imports increased to 120.4 tonnes in the April-June quarter, up from 10.9 tonnes in Q2 2020.
Mr. Somasundaram went on to say that digital solutions and a halt in limitations in some regions contributed to a 25% increase in jewellery demand to 55.1 tonnes.
"As prices fell, investment demand increased by 6% to 21 tonnes. Imports rose to 120.4 tonnes in expectation of a pick-up in fabrication, which was surprising. Overall, India's gold demand in the first half of 2021 was 216.1 tonnes, up 30% from the first half of 2020 "he added.
Though it remains at a multi-year low, he believes it shows underlying demand momentum that will likely support a strong rise in demand once COVID normality is restored.
Demand is anticipated to rebound strongly in the future, he added, but consumer confidence and corporate reaction will be influenced by the possibility of a third wave of COVID and the rate of economic recovery.
"One consoling view is that, given the rate of vaccination and sero survey findings, we may learn to live with COVID and its variations as a society, guaranteeing companies and sales grow more resilient," he said.
According to Mr. Somasundaram, Dhanteras and the next season, which includes more auspicious wedding days in Q4 2021 than the previous year, look to be favourable for demand.
"However, attractive equities markets and fluctuating gold prices are major challenges for the gold investment category. Consumer behaviour is influenced by a number of economic and non-economic factors, making it impossible to estimate full-year gold demand in India "he added.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
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