Demand for gold in India fell 30% July-September: World Gold Council

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An employee arranges one kilogram gold bars for a photo in Bangkok, Thailand, Jan. 13, 2016.Dario Pignatelli | Bloomberg | Getty Images

SINGAPORE – Gold demand in India fell 30% in the previous quarter, but a feeling of “cautious optimism” returned to the market, according to the World Gold Council.India is one of the biggest gold markets.

Demand for jewelry in India between July and September fell 48% year-on-year to 52.8 tonnes, from around 101.6 tonnes a year earlier, the organization said in a report. But the demand for gold as an investment rose 52% to 33.8 tonnes year on year.

Aggregate demand for gold – which includes jewelry and investments – fell in the quarter ending September, but the drop was less severe than the 70% drop seen in the previous three months, Somasundaram said. PR, Managing Director for India at the World Gold Council. A declaration.

“This is in part due to the easing of the lockdown and some low prices in August which provided a small window of buying opportunities for the discerning,” he said.

The precious metal plays an important role in Indian culture – it is considered auspicious to buy gold on festive occasions or to give gold jewelry as a gift at weddings. It is also considered a symbol of wealth and safe investment.

Somasundaram explained that the demand for gold between July and September tends to be relatively low, due to seasonal factors such as monsoons and bad times. The drop in demand for gold jewelry was also due to the cancellation or postponement of many festivals and weddings due to the coronavirus pandemic which has infected more than 8 million people in India.

“On the other hand, the safe haven attributes of gold and the anticipation of rising prices have paved the way for increased investment demand for gold bars and coins,” he added.

The combination of persistent social restrictions in many markets, the economic impact of lockdowns, and still high gold prices in many currencies have proven too important for many jewelry buyers.

Louise Street

World Gold Council

Typically, the demand for gold increases during the three months of October to December due to festivals such as Dussehra and Dhanteras – the first day of the Diwali festival – as well as a busy wedding season. But high gold prices and the impact of the pandemic are expected to affect sentiment and demand. Covid-19 has triggered lockdowns in India that have reduced growth prospects and left millions unemployed.

Although pent-up demand is expected to surface in the current quarter, it is unlikely to offset a drop in full-year gold demand for India, according to the World Gold Council.

Somasundaram said a “sense of cautious optimism has returned” as people gradually learn to live with Covid-19.

“However, as we are still reeling from the pandemic and the fear of a second wave of infections without a clear view of many variables on consumer behavior, price volatility or the duration of disruptions in demand. ‘annual gold in India other than to say that demand could be low over several years,’ Somasundaram said.

Global trends

According to the World Gold Council’s Gold Demand Trends Report, global gold demand fell 19% year-on-year to 892 tonnes for the July-September quarter – this was the highest quarterly total. low since the third quarter of 2009.

Central banks sold 12.1 tonnes of gold in net sales during the July-September quarter for the first time since late 2010. This was mainly driven by the central banks of Uzbekistan and Turkey, while six others , including the Reserve Bank of India, slightly increased their gold volume. reservations, according to the report.

Although aggregate demand for gold fell, the three months saw a significant surge in investment demand which rose 21% year over year as investors bought gold bars, gold-backed coins and ETFs.

Gold is seen as a safe investment to invest money in when markets face uncertainty or are volatile, which was the case during the pandemic and ahead of next week’s US presidential election.

Buyers, however, have been hesitant to buy gold jewelry due to the record price of the precious metal in many currencies and the economic uncertainties they face due to the global recession caused by the pandemic. Demand for jewelry has fallen 29% from a year ago.

Spot gold rallied above $ 2,000 in August before returning to trade around the $ 1,900 level in recent weeks. It traded at around $ 1,869 an ounce on Friday afternoon at 1:51 p.m. HK / SIN.

The impact of the pandemic is still being felt in the global gold market, according to Louise Street, World Gold Council trade information.

“The combination of persistent social restrictions in many markets, the economic impact of lockdowns, and still high gold prices in many currencies have proven to be too big for many jewelry buyers,” Street said in a statement. . “We believe this trend is likely to continue for the foreseeable future. ”

Total gold supply fell 3% year-on-year to 1,223.6 tonnes in the July-September quarter, linked to coronavirus-related restrictions at mines in the first half of the year.

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