Gold demand jumps 37% in March quarter

Driven by consumer sentiments, gold demand jumped 37 per cent in the March quarter. However, demand will be dampened in the current quarter despite Akshaya Tritiya and the wedding season falling within the April-June period.

The demand for gold in January-March 2021 was 140 tonnes, up by 37 per cent compared to the low base of 102 tonnes in the same quarter of last year. Historically gold has seen March quarter demand of 160 and 190 tonnes in some of the years.

Jewellery demand was up by 39 per cent at 102.5 tonnes and investment demand by 34 per cent at 37.5 tonnes. Bar and coin demand saw the strongest first quarter since 2015.

“India’s

Q1 2021 gold demand rose 37 per cent to 140 tonnes on the back of Covid containment and positive sentiment following the start of the vaccination programme. A combination of softening gold prices, buoying consumer sentiment following sharp pick-up in economic activity and return of social activities like weddings supported a 39 per cent growth in gold jewellery demand at 102.5 tonnes,” said P. R. Somasundaram, managing director India, World Gold Council.

The average domestic gold price of Rs 47,131 per 10 gm was 14 per cent higher against the same quarter last year, but was 6 per cent lower than the December quarter. It was 16 per cent lower than the August 2020 peak of Rs 56,000/10gm.

According to WGC, net bullion imports in the March quarter was 301 tonnes against 83.1 tonnes in Q1 2020, an increase of 262 per cent. Part of the imports was also meant for the Akshaya Tritiya and wedding season sales in the June quarter.

However, both these gold-buying events are expected to be lacklustre due to the surge in Covid19 cases and lock-down and restrictions in some of the key markets.

“The outlook for the coming quarter is, however, cautious. As lockdowns are re-imposed in various regions,” added Somasundaram.