Jewellery demand India fell by 48% in 3Q

Investment demand for gold bars and coins by 51% 

WGC India announces India Gold Demand Statistics for Q3 2020 (July - September). Speaking about India Gold Demand Statistics for Q3 2020, Somasundaram PR, Managing Director, India, World Gold Council said, India’s Q3 2020 gold demand fell by 30% to 86.6 tonnes on the back of Covid related disruptions, bleak consumer sentiment and high prices accompanied by volatility. 

This is, however, higher than Q2 which at 64 tonnes was a 70% drop and the second lowest in our quarterly series. This has been partially due to easing of lock down and some low prices in August that provided a small window of buying opportunities for the discerning. 

Q3 tends to be relatively low generally due to seasonal factors like monsoons and inauspicious periods like Pitru-Paksh and Adhik Maas. Jewellery demand fell by 48% to 52.8 tonnes as jewellery purchases did not have any support of festivals or weddings. On the other hand, gold’s safe haven attributes and an anticipation of price rise paved the way for an increase in investment demand for gold bars and coins by 51% to 33.8 tonnes.

One interesting development during these months of lockdown has been the rapid rise in digital engagement with several tech initiatives by top jewellers to woo buyers. Digital platforms selling allocated gold through wallets also recorded sharp rise in volumes, along with significant activity in Gold ETFs following a 75 prolonged period of quiescence. 

Due to higher prices, recycling increased by 14% to 41.5 tonnes, though inventory rationalisation by jewellers and steep discounts in the market did impact full price recovery for sellers. Imports resumed in anticipation of festival demand as supply chain-related restrictions were eased, growing from 9 tonnes in the previous quarter to 90.5 tonnes (8% y-o-y increases). 

Looking ahead, we typically witness an upswing in gold demand in the fourth quarter on account of Dussehra, Dhanteras and other festivals coupled with a busy wedding season post-harvest. This year, a good monsoon notwithstanding, price and Covid shadow will affect sentiment, though we can reasonably expect at least a part of the pent-up demand to surface. But as weddings and festivities become low-key affairs, savings on other spends could be channelised into gold. 

A sense of cautious optimism has returned among the trade stemming from the fact that the society is gradually learning to live with Covid. However as we are still reeling under the impact of the pandemic and fear of second wave of infections without clear sight of many variables on consumer behaviour, volatile prices or length of the disruptions, we will not be able to quantify the impact on the full year gold demand in India other than to say that demand could be multi-year low.”

Peep-up Key figures:

1: Demand for gold in India for Q3 2020 was at 86.6 tonnes down by 30% as compared to overall Q3 demand for 2019 (123.9 tonnes), 2: India’s Q3 2020 gold demand value was Rs 39, 510 crores, down by 4% as compared to Q3 2019 (Rs 41,300 crores), 

3: Total Jewellery demand in India for Q3 2020 decreased by 48% at 52.8 tonnes as compared to Q3 2019 (101.6 tonnes). 4: The value of jewellery demand was Rs 24,100 crores, down by 29% from Q3 2019 (Rs.33,850 crore), 

5: Total Investment demand for Q3 2020 at 33.8 tonnes increased by 52% in comparison to Q3 2019 (22.3 tonnes), 6: In value terms, gold Investment demand in Q3 2019 was Rs. 15,410 crores, up by 107% from Q3 2019 (Rs. 7,450 crores) & 7: Total gold recycled in India in Q3 2020 was 41.5 tonnes, up by 14% compared to 36.5 tonnes in Q3 2019.