Covid dents gold demand to 11-year low

Suresh P Iyengar Mumbai | Updated on July 30, 2020

PR Somasundaram, Managing Director-India, World Gold Council   -  Bijoy Ghosh

Demand for yellow metal in June quarter fell 70% to 64 tonnes against 213 tonnes during same period last year

Gold demand plunged 70 per cent to 11-year low of 64 tonnes in the June quarter against 213 tonnes logged in the same period last year on the back of an unprecedented economic disruption caused by the Covid pandemic.

The previous lowest quarterly demand of 40 tonnes was seen in March quarter of 2009.

Subsequently, jewellery demand decreased 74 per cent to an all-time low of 44 tonnes (169 tonnes) while investment demand plunged 56 per cent to 20 tonnes (44.5 tonnes).

Similarly, gold buying in the first half of this year fell to a new low or 56 per cent to 165 tonnes (372 tonnes), according to World Gold Council data released on Thursday.

Interestingly, despite all the gloom and doom amidst Covid and lockdown of jewellery shops till April 21, consumers bought jewellery worth R₹8,350 crore in June quarter even though it fell 63 per cent compared with ₹49,830 crore logged last year.

The overall gold buying was worth ₹27,600 crore (₹62,420 crore), including investments of ₹8,250 crore (₹13,040 crore) during the June quarter.

Despite high prices, recycled gold dropped 64 per cent to 14 tonnes (38 tonnes) while imports hit a new low at 12 tonnes (247 tonnes), down 95 per cent.

Healthy latent demand

Somasundaram PR, Managing Director (India), World Gold Council said notwithstanding the gloomy trend, sales during relaxation of lockdown in select cities point to a healthy latent demand that should surface once Covid turbulence is behind.

Agreeing that gold prices may remain volatile, he said given the amount of liquidity in global economy and challenging economic prices, gold prices may remain firm and not expected to crash in a hurry.

Global gold demand was down 11 per cent at 1,016 tonnes (1,137 tonnes) due to sharp 53 per cent fall in jewellery demand at 251 tonnes (530 tonnes). However, investments in gold was up 98 per cent at 583 tonnes (295 tonnes) on the back of nearly six times increase in gold ETFs inflows at 434 tonnes (76 tonnes).



Published on July 30, 2020

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like