December 3, 2020

Gold demand outlook: Gold demand in India unlikely to recuperate this 12 months: WGC

Kolkata: Gold demand in India could not recuperate considerably within the six months to December 2020 owing to rising costs, after demand plummeted 56% year-on-year within the first half of the 12 months to 165.6 tonnes, stated the World Gold Council (WGC).

Costs of the yellow metallic have crossed Rs 52,000 per 10 gm mark, up greater than 30% since January, however revenue progress or expectations haven’t saved tempo. This will likely limit restoration within the second half of the 12 months, stated Somasundaram PR, managing director-India at WGC.

“India’s Covid journey in H2 will chart the course and tempo of financial revival, of which gold demand is an integral half. A way of optimism is growing amongst commerce, nevertheless, that, by Dhanteras, Covid-related disruptions could matter much less as society learns to stay with it, with a attainable upside following some constructive information on Covid remedy,” stated Somasundaram.

“This could spur shopper confidence and jewelry demand. Quick rising gold costs may act as headwinds although. To place it in perspective, gold costs have risen by 60% since January 2019 and 30% since January 2020. Earnings progress or expectations haven’t saved tempo with this.”

The outbreak of Covid-19 pandemic has additionally impacted the worldwide demand of the valuable metallic. In response to the WGC, the worldwide demand for gold declined 6% within the first half of 2020 to 2,076 tonnes. Jewelry demand in India was 117.eight tonnes, down from 294.1 tonnes within the first half of 2019. Funding demand was 47.eight tonnes, down 39% from {that a} 12 months in the past.

The WGC India chief stated that 2020 will probably be among the many years with lowest gold consumption. “Nevertheless, monsoon has been good this 12 months which can enhance demand for gold in rural India. Additionally, persons are spending extra time at house and due to this fact their bills have come down. They wish to make investments their financial savings in some instrument and gold could emerge as a most well-liked alternative,” he stated.

“However all these depend upon how the coronavirus behaves in coming months,” stated Somasundaram. “There may be lots of likelihood concerned and due to this fact WGC is not going to prefer to peg any determine for second half demand.”

Gold demand in India within the second quarter of 2020 was 63.7 tonnes, down 70% year-on-year. Whole jewelry demand in India fell 74% to 44 tonnes whereas funding demand was down 56% at 19.eight tonnes. Whole gold recycled within the nation was 13.eight tonnes, down 64% from 37.9 tonnes a 12 months in the past.