Gold demand in India fell 36 per cent in the January-March quarter of this year to 101.9 tonne due to volatile prices, economic uncertainties and coronavirus-induced nationwide lockdown towards the end of the quarter, according to a report.

Jewellery demand and gold investment demand also declined in the first quarter and going ahead it could be a “challenging year” unless the industry is able to get the artisans and reorganise the supply chain in quick time.

According to the World Gold Council’s (WGC) Q1 Gold Demand Trends report, in terms of value India’s the first quarter gold demand fell 20 per cent to ₹37,580 crore, compared to ₹47,000 crore in the same period of 2019.

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Gold prices jumped 25 per cent to an average of ₹36,875 per 10 grams, without customs duty and taxes, during the first quarter of this year, compared to an average of ₹29,555 in the same period of 2019, WGC India Managing Director Somasundaram PR told PTI here.

“Indian gold demand in the first quarter of 2020 dropped due to a combination of factors such as high and volatile prices, economic uncertainties and towards the end of the quarter, severe logistical freeze following lockdown,” he added.

Sharp drop in jewellery demand

Meanwhile, total jewellery demand during the quarter also declined by 41 per cent at 73.9 tonne compared to 125.4 tonne in January-March of 2019. In value terms, jewellery demand saw a drop of 27 per cent at ₹27,230 crore as against ₹37,070 crore in the same quarter of 2019.

“Wedding demand during the first few weeks of the quarter did appear to bring in some seasonal cheer. However, later developments, more particularly since the beginning of March, disrupted the market and consumer confidence, resulting in a sharp drop in jewellery demand by 41 per cent,” Somasundaram said.

The total investment demand in the first quarter of 2020 was down by 17 per cent at 28.1 tonne. In value terms, however, gold Investment demand was up by 4 per cent on a year-on-year basis at ₹10,350 crore. “Investment demand, though lower by 17 per cent at 28.1 tonnes, was relatively better as sentiments towards equities turned negative and investors turned to gold’s liquidity and safe haven status,” he said.