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Hit by high prices and unprecedented Covid pandemic, gold demand last year plunged to the lowest in 25 years of 446 tonnes. It was a 35 per cent drop compared to 690 tonnes logged in 2019.
Gold jewellery demand fell even sharper by 42 per cent to 316 tonnes (545 tonnes) while that of investment was down 11 per cent to 130 tonnes (146 tonnes).
In terms of value, the demand was down 14 per cent at ₹1.88 lakh crore (₹2.17 lakh crore) while jewellery demand dipped 22 per cent to ₹1.33 lakh crore (₹1.71 lakh crore). Investments in gold increased 20 per cent to ₹55,020 crore (₹45,980 crore).
Year on year, gold prices zoomed to ₹42,182 per ten grams against ₹31,542 logged in 2019.
Despite signs of revival in gold sales due to fall prices in the December quarter, gold sales dipped four per cent to 186 tonnes (194 tonnes), and that of jewellery dropped eight per cent to 137 tonnes (149 tonnes). However, învestment demand was up 8 per cent to 49 tonnes.
Gold demand in value was ₹82,790 crore, an increase of 26 per cent compared to ₹65,890 crore logged in December quarter of 2019.
Jewellery and învestments were up 21 per cent and 41 per cent at ₹61,060 crore and ₹21,730 crore.
Measure needed to stop smuggling
Despite the sharp rise in prices gold recycling was down at 22 tonnes (29 tonnes), reflecting consumers affinity to gold and for 2020 it plunged to 96 tonnes (119 tonnes).
In the December quarter, gold demand dipped 31 per cent to ₹44,474 tonne (₹33,912) per 10 grams.
Last year’s import were down 47 per cent to 344 tonnes (647 tonnes) in line with weak demand. However, in December quarter rose 19 per cent, pointing to the positive impact of pent-up demand.
Somasundaram PR, Managing Director (India), World Gold Council said as Covid induced lockdown eased, and normalisation efforts were phased in which is expected to continue this year. Further return of normalcy and steady course of reforms would strengthen the industry, he said.
Some how, consumers have accepted the current high price level as the new normal.
In addition, current high stock indices and low-interest rates will add significant weightage to gold amidst the inevitable return of celebrations and festivities, he said.
"We could see a strong spurt in gold demand for the next few years, a repeat of what happened after a sharp drop in 2009,' he said. In such a scenario, the current high tax on gold increases the lure of smuggling,” he added.
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