Gold demand dips to lowest in 25 yrs

„Demand contracts 35 per cent in 2020

Despite the recovery made in the December quarter, gold demand contracted 35 per cent in 2020 to the lowest level in 25 years.

The gold demand for the full-year 2020 was 446.4 tonnes compared to 690.4 tonnes in 2019—a decline of 35 per cent, according to data from the World Gold Council. This was the lowest demand since 1995.

The year 1995 had seen one of the lowest yearly demand of 462 tonnes since the World Gold Council has been recording annual gold demand.

"India's gold demand dropped by over a third in 2020, settling at 446.4 tonnes, on the back of Covid-induced lockdowns and lifetime high prices. However, the drop was significantly lower when viewed in value terms, 14 per cent lower than 2019 as prices were up 34 per cent, hovering around Rs 50,000 per 10 gm for most part of the year," said Somasundaram P.R., managing director, India, World Gold Council.

Jewellery demand fell 42 per cent to 315.9 tonnes and investment demand fell by 11 per cent to 130.4 tonnes in 2020.

In the first three quarters of 2020, gold demand stood at 252 tonnes, which was 49 per cent down from 496 tonnes in the same period last year. In the fourth quarter of festivals, however, demand was just 4 per cent down at 186.2 tonnes compared to 194.3 tonnes in the same quarter of 2019.

While jewellery demand was down by just 8 per cent at 137.3 tonnes, investment demand was up by 8 per cent at 48.9 tonnes against 45.3 tonnes in Q4 of 2019.

"The demand for bars and coins had gone up not just during the auspicious occasions but even otherwise,' said Somasundaram.

Import of official gold was down 46 per cent in 2020 and the restrictions on international travel due to the pandemic also saw the grey market supply shrinking by onefourth of last year's 115 tonnes.

Closure of stores and retail establishments also saw the quantum of recycled gold coming down to 95.5 tonnes compared to 119.5 tonnes in 2019.

Globally, annual demand was 14 per cent down to 3,759.6 tonnes and 2020 saw the demand falling below 4000 tonnes for the first time since 2009.

The largest gold consumer, China, saw the demand shrinking by 28 per cent. However, Germany's investment demand grew in 2020, replacing India from the second slot.

India's gold demand dropped by over a third in 2020, settling at 446.4 tonnes, on the back of Covid-induced lockdowns and lifetime high prices. However, the drop was significantly lower when viewed in value terms, 14 per cent lower than 2019 as prices were up 34 per cent, hovering around Rs 50,000 per

10 gm for most part of the year" —Somasundaram P.R. MD, India, World Gold Council