India's Q2 Jewellery Demand Falls 74 Pc to 44 Tonnes

Andrew Cummings
July 30, 2020

It surged about 90 per cent to 1,131 tonnes in the first half of 2020, the World Gold Council said in its Gold Demand Trends report on Thursday.

The WGC's "Report on Gold Demand Stance in the Second Quarter" states that gold demand in India decreased by 57 per cent to Rs 26,600 crore in the second quarter by value, from Rs 62,420 crore in the same quarter past year. According to the WGC, the global demand for gold declined 6% in the first half of 2020 to 2,076 tonnes.

In the second quarter, demand for jewelery declined by 74 percent to 44 tonnes from 168.6 tonnes.

In value terms, sales were Rs 26,600 crore, down by 57%.

In value terms, gold Investment demand during the second quarter witnessed a dip of 37 per cent at Rs 8,250 crore from Rs 13,040 crore. "Meanwhile, the coronavirus-triggered lockdown also slashed demand by 70% in the June quarter to 63.7 tonnes, the lowest in more than a decade". Similarly, gold imports within the nation fell by 95 % to 11.6 tonnes within the second quarter, from 247.four tonnes in the identical interval of 2019.

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. Investment demand was 47.8 tonnes, down 39% from that a year ago.

The coronavirus pandemic triggered stockpiling of gold in Europe and North America as insurance against inflation and market turmoil, driving prices up nearly 30 percent this year to more than United States dollars 1,950 an ounce.

The price momentum of the yellow metal is also leading to greater tactical allocation to gold by institutional and sophisticated investors, said Naylor, who noted anecdotal evidence that institutional investors are pivoting towards ETFs from the gold futures market.

The Council says rate cuts and support spending and other moves from governments and central banks reacting to the pandemic "fuelled record flows of 734 tonnes into gold-backed ETFs (gold ETFs)".

"Overall, gold demand in India in H1 2020 was 165.6 tonnes, plummeting 56 per cent in comparison to H1 2019, despite marginal increase of gold ETF buying in keeping with global trends", he stated.

According to a Reserve Bank of India (RBI) survey, the consumer confidence index fell to a historic low of 63.7 in May from 85.6 in March, and the one-year ahead confidence index also recorded a sharp fall.

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. "We believe that jewellery demand will improve from both nations, however, we do see that China again will be driving the demand, rather than India due to higher import duty and taxes on the import of raw materials", Sriram Iyer added.

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