India’s gold demand plunged 36% in the first quarter


India’s gold demand plunged 36% in the first quarter of 2020. The demand dropped to 101.9 tonnes due to highly volatile prices. The economic uncertainties brought in by the worldwide spread of the coronavirus caused COVID-19 disease is also a major reason for this crisis. World Gold Council’s quarter 1 gold demand trends report, in terms of value India’s first-quarter gold demand, fell 20 per cent to Rs. 37,580 crore, compared to Rs.47,000 cross in the same period of 2019.

The prices of the metal increased by 25% to an average of Rs. 36,875 per 10 grams, without duties and taxes from January to March. The same period, last year, had an average of Rs. 29,555. The total jewellery demand during the first quarter of 2020 dropped by 41% at 73.9 tonnes, which was 125.4 tonnes the previous year’s first quarter. In value terms, jewellery demand declined by 27% at Rs. 27,230 crores as against Rs. 37,070 crore in the same quarter of 2019.

Somasundaram, industry group WGC India’s managing director, gives a brief description of this steep reduction in the industry. He gives two explanations for the fall in demand of gold in India. One, the sharp increase in prices and second, the general economic slowdown in countries all over the world. That is, the gold imports fell due to high prices and lower rural demand.

He also explained that when demand is low people have a tendency to recycle the gold. The total quantity of gold recycling increased by 16% at 18.5 tonnes. Collateralising loans against god is expected to grow turbulently due to the rising gold prices as one of the major impacts of lockdown. On this aspect he says, “in that scenario, it is possible that good becomes a tool for the revival of many SME businesses and household fortunes. This perhaps presents an opportunity that could revive the Gold Monetization Scheme in a consumer-friendly manner. ”

He also said that the investment demand though down by 17% was still better as investors shifted to Safe Havens, which indicated negative sentiments towards equities. The total investment demand was reduced by 17% at 28.1 tonnes. However, the gold investment demand was positive by 4% on a year on year basis at Rs. 10,350 crores, in value terms.

Also, Read Jeff Bezos becomes double rich as Mark Zuckerberg, net worth hits $149B