Hit by the Covid-19 pandemic, job losses across sectors and high prices, gold demand in India is slated for the lowest ever in this year. Gold demand in the first three quarters of this year was down 49 per cent at 252 tonnes (496 tonnes), according to the World Gold Council report released on Thursday.
Even if gold sales touch the last December quarter-mark of 194 tonnes, the overall demand for the yellow metal this year will plunge to the lowest-ever level of 446 tonnes, much lower than 462 tonnes registered in 1995.
In the September quarter, demand plunged 30 per cent to lowest-ever third quarter level of 87 tonnes (124 tonnes) on the back of sharp fall in jewellery demand which was down 48 per cent to 53 tonnes (102 tonnes).
Somasundaram PR, Managing Director (India), World Gold Council, said that gold demand in September quarter was hit by Covid-related disruptions, bleak consumer sentiment and high prices, accompanied by volatility. However, the demand was higher than 64 tonnes in the June quarter due to easing of lockdown and fall in prices in August, he said. “We did not want to hazard a guess on this year’s demand as there are lot of uncertain factors due to the Covid pandemic,” he said.
Though everyone thought the stock market would crash due to lower economic growth, it is hitting a new high consistently. Excess global liquidity is driving gold prices even though the demand has fallen, he said.
“We are not predicting the year’s gold demand though there are only eight weeks to go in this year because all the tools to predict demand has failed in front of Covid pandemic,” he said.
Recycling has increased 14 per cent to 41 tonnes due to high gold prices. Imports were up 8eight per cent to 90 tonnes on anticipation of renewed demand during festival season.
Typically, gold demand goes up in the fourth quarter on account of Dussehra, Dhanteras and other festivals, coupled with a busy wedding season post-harvest. Notwithstanding the good monsoon, high price and the Covid shadow continue to affect sentiment.