India gold investment down by 11% in 2020: WGC

India jewellery demand down by 42% in 2020 

Expected 2021 to go further normalcy returns and steady course of reforms strengthen the industry India! 

Implementation of mandatory hallmarking in June 2021 

Key Highlights: 1: Gold demand full year January –December 2020, 2: The gold demand for the full-year 2020 is 446.4 tonnes compared to 690.4tonnes in 2019, 3: Total jewellery demand in India for 2020 was down by 42% at 315.9 tonnes as compared to 544.6 tonnes in 2019, 4: The value of jewellery demand in 2020 was Rs.133,260 crores, down by 22% from 2019(Rs. 171,790 crore) . 

5: Total investment demand for 2020 was down by 11% at 130.4 tonnes in comparison to 145.8 tonnes in 2019 In value terms, gold investment demand was Rs. 55,020 crores, up by 20%from 2019(Rs. 45,980 crores),6: Total gold recycled in India in 2020 was 95.5 tonnes as compared to 119.5 tonne.

Somasundaram PR, Managing Director, India, World Gold Council said:“India’s gold demand dropped by over a third in 2020 settling at 446.4tonnes, on the back of Covid-induced lockdowns and lifetime high prices.

However, the drop was significantly lower when viewed in value terms, 14% lower than 2019 as prices were up 34% hovering around Rs 50,000/10 grams for most past of the year. Jewellery demand fell 42% to 315.9 tonnes and investment demand fell by 11% to 130.4 tonnes in 2020, mainly due to pandemic related restrictions.

However, in Q4 2020, the festive period and the ensuing wedding season revived hopes and drew in jewellery demand worth 137.3 tonnes—the strongest quarter in the year. 

Investment demand also showed significant resilience, growing 8% to 48.9 tonnes. Predictably, as lockdown eased and normalisation efforts were phased in, imports in Q4 rose 19% year-on-year, pointing to the positive impact of pent-up demand. 

This can be expected to continue into 2021 as further normalcy returns and steady course of reforms strengthen the industry. With the implementation of mandatory hallmarking in June 2021, establishment of the international bullion exchange in GIFT city and Retail Code of conduct under the aegis of the industry steering committee, industry growth will be qualitatively superior underpinned by global ambitions and strong awareness of trust and transparency. 

From the consumers’ perspective, there is acceptance of 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 inevitable return of celebrations and festivities. 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.

In such a scenario, the current high tax on gold increases the lure of smuggling, so duty cut to reasonable levels is absolutely necessary, along with tax concessions for recycling gold, innovations and digital interventions.2021 will likely set a trend of long term growth in Indian gold demand and the benefits of such growth can be explicitly captured if coordinated policy measures are sustained, making gold a mainstream asset class.”