Q2 Jewellery demand in India fall by 74%
According to the World Gold Council-India, during the April – June quarter-Q2, Covid-19 impacted high upon the gold & jewellery demand India. Demand for gold in India for Q2 2020 was at 63.7 tonnes down by 70% as compared to overall Q2 demand for 2019 (213.2 tonnes). India’s Q2 2020 gold demand value was Rs 26,600 crores, down by 57% as compared to Q2 2019 (Rs 62,420 crores)
Total Jewellery demand in India for Q2 2020 decreased by 74% at 44 tonnes as compared to Q2 2019 (168.6 tonnes) o The value of jewellery demand was Rs 18,350 crores, down by 63% from Q2 2019 (Rs. 49,380 crores).
Total Investment demand for Q2 2020 at 19.8 tonnes was down by 56% in comparison to Q2 2019 (44.5 tonnes)
In value terms, gold Investment demand in Q2 2020 was Rs. 8,250 crores, down by 37% from Q2 2019 (Rs. 13,040 crores). Total gold recycled in India in Q2 2020 was 13.8 tonnes, down by 64% compared to 37.9 tonnes in Q2 2019. Total gold imports in India in Q2 2020 were 11.6 tonnes, down by 95% compared to 247.4 tonnes in Q2 2019.
Somasundaram PR, Managing Director, India, World Gold Council said: Q2 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%. Sales trend during the window of opportunity afforded by relaxation of lockdown in select cities does point to healthy latent demand that should surface once COVID turbulence is behind us.
Demand for jewellery dropped by 74% to 44 tonnes, in an atmosphere of fear and uncertainty where weddings were postponed or just turned out to be uncharacteristically quiet and private. Investment demand fared relatively better, with demand drop lower at 56% to 19.8 tonnes - as gold’s safe-haven attributes and perhaps some price increase anticipation attracted HNIs and investors.
Naturally, online buying convenience played a significant part in consumer behaviour during the lockdown, as we saw Gold ETFs grow after being dormant for many years. Digital gold too saw significant activity though volumes are yet negligible in the overall demand scenario.
Logistical issues and poor demand crashed imports by 95%, to a mere 11.6 tonnes. Overall, gold demand in India in H1 2020 was 165.6 tonnes, plummeting 56% in comparison to H1 2019, despite the marginal increase of gold ETF buying in keeping with global trends.
India’s COVID journey in H2 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-related disruptions may matter less as society learns to live with it, with a possible upside following some positive news on COVID treatment.
This should spur consumer confidence and jewellery demand. Fast-rising gold prices could act as headwinds though. Price is currently a life-time high of over INR 50,000/10gms, a key milestone and response are naturally mixed – with content investors and wary consumers! To put it in perspective, gold prices have risen by 60% since January 2019 and 20% since January 2020; income growth or expectation has not kept pace with this.
As we are still in the midst of the crisis without clear sight of many variables on consumer behaviour, prices or length of the disruption, we will not be able to quantify the impact on the full-year gold demand in India.