Covid impact: Gold demand in India seen plunging to lowest on record

Gold: India's 2020 demand could hit 26-year low as prices rally to record high – WGC

"Fast rising gold prices could act as headwinds though", he added.

The half-yearly report on the gold market from the World Gold Council and the Refinitiv June quarter survey raises that question as both point to strong buying by ETFs.

Inflows into gold ETFs accelerated in the second quarter, taking H1 inflows to a record-breaking 734 tons.

Central banks bought 233 tonne of gold during H1, 39 per cent below 2019's record level, as per the report.

He said, demand for jewellery dropped by 74 per cent to 44 tonnes, in an atmosphere of fear and uncertainty where weddings were postponed or just turned out to be uncharacteristically quiet and private.

The WGC's "Report on Gold Demand Stance within the Second Quarter" states that gold demand in India decreased by 57 per cent to Rs 26,600 crore within the second quarter by worth, from Rs 62,420 crore in the identical quarter final yr.

Going forward, he said, India's COVID-19 journey in H2 will chart the course and pace of economic revival of which gold demand is an integral part.

Also Read | Friendship Day 2020 Date in India Calendar: Know Significance Behind Celebrating Friendship Day on First Sunday of August Every Year. Apart from the investment demand, silver is also a key component in electric vehicles and as the demand for the latter rises, the metal will also be in demand.

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 Dollars 1,950 an ounce.

"The rising metal prices could act as a deterrent in consumer's gold purchase decisions, along with concerns of unemployment and income erosion", he pointed.

"Coin demand, which is the sum of official coin fabrication and medals & imitation coins (MIC), slipped by 5% in the second quarter". It fell by 46 per cent on annual basis to 572 tonnes in the first quarter, according to the report.

Apart from gold, silver prices have also shot up over 30 per cent in global markets, scaling seven-year highs.

"South Africa, Indonesia, Peru, and Argentina suffered heavy losses, while moderate gains were reported in Russian Federation and Australia, mainly emphasising governments' different approaches to the pandemic".

"According to our records, almost 130 mines had to be put under care and maintenance or continued to operate under reduced capacity".

The lockdowns implemented across Asia, Europe and North America severely disrupted the consumer-focused sectors of the market, with jewellery demand falling to unprecedented low Levels, Street noted.

"Lower scrap volumes were due to disruptions and shutdowns caused by the COVID-19 outbreak, which saw scrap collecting agencies as well as refineries in many markets shut down for a few weeks, and thereafter operate at reduced capacities after re-opening", Refinitiv pointed out.



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