The demand for gold in India could flatten in the April-June quarter on account of COVID-19-related lockdowns, the World Gold Council (WGC) said.
“As lockdowns are reimposed in various regions of the country in response to rising COVID-19 cases, consumer confidence has dipped,” said Somasundaram P.R., MD, India, WGC.
“This is likely to impact wedding demand in Q2 2021,” he added, maintaining a cautious outlook for the quarter.
Digital cushion
“Digital and omnichannel retail strategies developed over the last year by many players may cushion the drop unlike Q2 2020 but the current crisis is beyond just economics and logistics and therefore, sentiment may be affected till large-scale vaccination is achieved,” he said.
“We are unable to quantify the impact on full year gold demand as we do not have sight of several critical factors currently at play.”
As per WGC data for the January-March quarter, gold demand rose 37% to 140 tonnes from the year-earlier period. In value terms, it rose 57% to ₹58,800 crore.
Total jewellery demand increased 39% to 102.5 tonnes and the value of jewellery demand was estimated at ₹43,100 crore, up 58%. Investment demand increased 34% to 37.5 tonnes and in value terms, it was ₹15,780 crore, up 53%. Net bullion imports more than doubled to 301 tonnes, an increase of 262% from the same period last year, as per the data.
“Gold demand rose 37% in Q1 on the back of COVID-19 containment and positive sentiment following the start of the vaccination programme,” said Mr. Somasundaram.
“A combination of softening gold prices, buoying consumer sentiment following a sharp pick-up in economic activity and return of social activities supported a 39% growth y-o-y in gold jewellery demand at 102.5 tonnes.”
The average domestic gold price of ₹47,131/10gm was 14% higher y-o-y but a significant 16% lower than the August 2020 peak of ₹56,000/10gm, he said.
