Gold demand fell 36% in the first quarter of 2020
Chennai: In the wake of high gold prices and market volatility at the end of the quarter due to the Covid-led blockade, demand for the precious metal in India for the first quarter of 2020 2020 fell 36% to 101.9 tons compared to 159 tons demand for the same period in 2019.
By value, it stood at Rs 37,580 crore, down 20% compared to the first quarter of 2019 which saw a demand for gold worth Rs 47,000 crore.
Volatile prices and economic uncertainty led to a 41% drop in jewelry demand to 73.9 tons compared to 125.4 tons in the corresponding period of the previous year. “The drop was due to a combination of factors such as volatile prices, economic uncertainties and towards the end of the quarter, the severe logistics freeze after the close. The demand for weddings during the first few weeks of the quarter seemed to bring some seasonal joy, ”said PR Somasundaram, MD India, World Gold Council.
High gold prices are expected to increase recycling by 16%. Recycling and secured gold loans are expected to grow exponentially in the coming quarters as the immediate economic impact of the blockade becomes apparent, he added. Data shows that the total gold recycled in India was 18.5 tons, 16% more than 16.1 tons.
However, even when the demand for gold has fallen for more than 3 quarters now, the council cannot assess the expected demand for next year. “A digital transformation of the industry could be a positive result of the current crisis, as social distancing, contactless payments and other behavioral needs challenge previous forms of consumer participation. We cannot quantify the impact on demand for the entire year, as we do not take into account several critical factors at play in the current circumstances, added Somasundaram.