India Q1 gold demand drops to 20% YoY!
World Gold Council (WGC) released, India Demand Statistics for Q1 2020- for the period of January to March 2020. Highlight of the report says for Gold demand full year that, 1: Demand for gold in India for Q1 2020 was at 101.9 tonnes down by 36% as compared to overall Q1 demand for 2019 (159 tonnes).
2: India’s Q1 2020 gold demand value was Rs 37,580 crores, a drop of 20% in comparison with Q1 2019
(Rs 47,000 crores), 3: Total Jewellery demand in India for Q1 2020 was down by 41% at 73.9 tonnes as compared to Q1 2019 (125.4 tonnes).
3: The value of Jewellery demand was Rs 27,230 crores, a drop of 27% from Q1 2019 (Rs. 37,070 crore)
4: Total Investment demand for Q1 2020 was down by 17% at 28.1 tonnes in comparison with Q1 2019 (33.6 tonnes), In value terms, gold Investment demand was Rs. 10,350 crores, a rise of 4% from Q1 2019 (Rs. 9,940 crores) & 5: Total gold recycled in India in Q1 2020 was 18.5 tonnes, as compared to 16.1 tonnes in Q1 2019, a rise of 16% compared to Q1 2019.
Somasundaram PR, Managing Director, India, WGC said, “Indian gold demand in Q1, 2020 dropped 36% to 101.9 tonnes due to a combination of factors such as high and volatile prices, economic uncertainties and towards end of the quarter, severe logistical freeze following lockdown.
Investment demand, though lower by 17% at 28.1 tonnes, was relatively better as sentiments towards equities turned negative and investors turned to gold’s liquidity and safe haven status. Wedding demand during the first few weeks of the quarter did appear to bring in some seasonal cheer.
However, later developments, more particularly since beginning of March, disrupted the market and consumer confidence, resulting in a sharp drop in jewellery demand by 41% to 73.9 tonnes.
Life-time high prices of gold expectedly increased recycling by 16%. Recycling and collateralised loans against gold may be expected to grow exponentially in the next few quarters as the immediate economic impact of the lockdown becomes evident and hopefully, fundamental reforms follow, easing business sentiment.
In that scenario, it is possible that gold becomes a tool for revival of many SME businesses and household fortunes. This perhaps presents an opportunity that could revive GMS (Gold Monetisation Scheme) in a consumer- friendly manner. Consumer sentiment could receive a boost with the arrival of a normal monsoon as predicted by IMD.
Issues of integrity of gold and right price will receive greater consumer attention as gold prices test affordability. A digital transformation of the industry could be a positive outcome of the current crisis, as social distancing, contactless payments and other behavioural necessities challenge earlier forms of consumer engagement.
We are unable to quantify the impact on full year demand as we do not have sight of several critical factors at play under current circumstances.”
