INDIA’S GOLD DEMAND HIT 25-YEAR LOW IN 2020
Demand for gold in India in CY20 dropped to a 25-year low of 446 tonnes as compared to 690.4 tonnes in 2019, according to the latest report released by the World Gold Council (WGC). “The last time the demand hit such levels was in 1995 at 462 tonnes,” said Somasundaram P R, MD (India), WGC.
Jewellery demand, too, during the period under review in India slipped 42 per cent at 315.9 tonnes compared with 544.6 tonnes in 2019. In value terms, jewellery demand in 2020 came in at more than ~1.33 trillion, down 22 per cent compared with 2019, the WGC data shows.
“India’s gold demand dropped by over a third in 2020 owing to Covid-induced lockdowns and lifetime-high prices. However, the drop was significantly lower when viewed in value terms, 14 per cent below that in 2019 because prices were up 34 per cent, hovering around ~50,000/10 gm for the most part of the year,” he said.
Q3 revives hope
The easing of lockdown restrictions, the festive period, and the subsequent wedding season, however, revived demand hopes and drew in jewellery demand worth 137.3 tonnes in the December quarter. This, the WGC said, was the strongest quarter for gold demand in 2020. Investment demand showed significant resilience, growing 8 per cent to 48.9 tonnes during the December 2020 quarter.
Overall, gold demand in India during the December quarter stood at 186.2 tonnes, down a marginal 4 per cent over the corresponding period in 2019 (194.3 tonnes). In terms of value, however, the demand was 26 per cent higher at ~82,790 crore YOY as prices rose over the year.
Global view
In 2020, global demand came in 14 per cent lower at 3,759.6 tonnes, the WGC said, and attributed the fall to the pandemic. This was the first time since 2009 that global demand on an annual basis slipped below 4,000 tonnes. Global gold-backed ETFS grew by 877.1 tonnes during 2020, reaching a record yearend holding of 3,751.5 tonnes.
The annual gold supply also took a hit and was 4 per cent lower YOY (4,633 tonnes), the biggest fall since 2013. The drop, according to the WGC, is mostly on account of pandemic-related disruption in mine production, which was offset by a marginal 1 per cent increase in recycling to 1,297.4 tonnes in 2020.