Gold demand within the nation decreased by 70%, know what’s the motive

Daniel Fowler
July 30, 2020

Fast rising gold prices could act as headwinds though. "There is a lot of probability involved and therefore WGC will not like to peg any figure for second half demand".

In the previous year the second quarter of 2019, gold demand in India was 213.2 tonnes.

In the second quarter, demand for jewelery declined by 74 % to 44 tonnes from 168.6 tonnes.

In value terms, sales were Rs 26,600 crore, down by 57%. It surged about 90 per cent to 1,131 tonnes in the first half of 2020, the World Gold Council said in its Gold Demand Trends report on Thursday.

Investment demand for gold by worth declined by 37 per cent to Rs 8,250 crore from Rs 13,040 crore in the identical quarter final yr.

Meanwhile, Refinitiv said the June quarter saw physical gold demand fall to 677 tonnes - its lowest levels since the March quarter of 2009 as record-high gold prices led to a drop in consumption.

Kolkata: Gold demand in India may not recover significantly in the six months to December 2020 owing to increasing prices, after demand plummeted 56% year-on-year in the first half of the year to 165.6 tonnes, said the World Gold Council (WGC).

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Central banks bought 233 tonne of gold during H1, 39 per cent below 2019's record level, as per the report. The gold price reached record highs in numerous other currencies, including euros, sterling, rupee and renminbi, among others. The US dollar gold price gained 17% in H1, following a 10% increase during Q2. "On the contrary, consumer demand took a brutal hit from COVID-19 in the first of 2020".

Global jewellery demand dropped to a record low for the second consecutive quarter, declining by 53 per cent during the quarter under review to 251.5 tonne compared to 529.6 tonne in the same period a year ago.

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Similarly, Central Banks net purchases declined by 50 per cent year-on-year to 114.7 tonne during Q2 of 2020, compared with 231.7 tonne during April-June last year. "We believe that jewellery demand will improve from both nations, however, we do see that China again will be driving the demand, rather than India due to higher import duty and taxes on the import of raw materials", Sriram Iyer added.

But that fall came from reduced flows in the three largest markets, Asia, Europe and North America, which together account for almost 90% of global scrap supply.

Total investment demand for Q2 2020 declined by 56 per cent to 19.8 tonnes during the quarter under review against 44.5 tonnes a year ago.

"The consumer-focused sectors of the market will likely remain subdued for the next six months, but ongoing uncertainty and the threat of further waves of the pandemic mean that gold's safe haven status will appeal to investors for the foreseeable future", Street added.

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