Q3 gold demand up 47% as offtake revives and Covid restrictions ease

Suresh P Iyengar Mumbai | Updated on October 30, 2021

Jewellery offtake lower than Q3 2019

Gold demand during the September quarter increased 12 per cent to 139 tonnes against 124 tonnes during the same period in 2019, while jewellery demand was down at 96 tonnes against 102 tonnes during the same period.

However, compared with the September quarter of 2020, the overall demand is up 47 per cent as Covid-induced restrictions eased across the country, according to data released by the World Gold Council on Thursday.

Pent-up demand

Similarly, jewellery demand was up 58 per cent buoyed by lower prices and pent-up purchases. In value terms, it was up 48 per cent at ₹41,030 crore against ₹27,750 crore logged in September 2020. Investments in gold increased 19 per cent to ₹18,300 crore (₹15,410 crore).

Somasundaram PR, Regional CEO, India, World Gold Council, said the revival in demand reflects a combination of low base effect and return of positive trade and consumer sentiments.

It was primarily driven by higher vaccination against Covid and falling infection rates, which led to a strong economic rebound, he said.

Softer gold prices have also generated significant consumer interest ahead of festival season, he said.

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Imports double

Gold imports more than doubled in September quarter to 267 tonnes against 96 tonnes logged in the same period last year. In fact, gold imports in the three quarters this year at 691 tonnes is higher than the demand of 360 tonnes recorded in the year-ago period. Recycling of gold halved to 21 tonnes on the back of lower prices.

Gold prices in the September quarter was down seven per cent at ₹42,635 per 10 grams against ₹45,640 registered last year.

Led by rural India, gold jewellery sales in the December quarter will be one of the highest in the recent times due to ensuing festivals.

This, in turn, will boost the overall demand this year and it will be much higher than the 446 tonnes logged last year, he said.

In the first nine months, demand has already touched 360 tonnes against 261 tonnes logged last year.

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Hallmarking issues settled

The compulsory hallmarking of gold jewellery along with unique identification code is slowly stabilising after Bureau of Indian Standards (BIS) shifted the responsibility to the manufacturers from jewellers, Somasundaram added.

Following this, the hallmarking centres will be more concentrated closer to the jewellery manufacturing units. However, care should be taken to ensure that hallmarking is done by an independent third-party agency rather than the manufacturers themselves, he said.

BIS is yet to automate the process of tracking the distribution of jewellery from manufacturers to retailers using the HUID to ensure there are no tampering, he said. The WGC expects demand for digital gold to increase manifold this festival season largely on basis of convenience.



Published on October 28, 2021

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