India's gold demand plunges by 35% in 2020, lowest since 1995, say World Gold Council

India's gold imports of 164.4 tonnes in the December quarter were the highest in six quarters, fuelled by improving demand during Dussehra and Diwali

India witnessed a sharp 35 per cent drop in demand for gold in 2020. The country saw demand for 446.4 tonnes of gold compared to 690.4 tonnes in 2019 as Covid-19-induced lockdowns and high prices disrupted the business. This is the lowest demand for gold since 1995.

Total jewellery demand in India for 2020 was down by 42 per cent at 315.9 tonnes as compared to 544.6 tonnes in 2019. The value of jewellery demand in 2020 was Rs 1.33 lakh crore, down by 22 per cent from 2019 (Rs 1.71 lakh crore), according to the World Gold Council (WGC).

Total investment demand for 2020 was down by 11 per cent at 130.4 tonnes in comparison to 145.8 tonnes in 2019. In value terms, gold investment demand was Rs 55,020 crore, up by 20 per cent from 2019 (Rs 45,980 crore).

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The total gold recycled in India in 2020 was 95.5 tonnes as compared to 119.5 tonnes in 2019, the WGC said.

Somasundaram P R, Managing Director, India, World Gold Council said, “India’s gold demand dropped by over a third in 2020 settling at 446.4 tonnes, on the back of Covid-19-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 50,000/10grams for the most part of the year.”

He said the fall in jewellery and investment demand was mainly due to pandemic-related restrictions. However, in Q4 2020, the festive period and the ensuing wedding season revived hopes and drew in jewellery demand worth 137.3 tonnes — the strongest quarter in the year. Investment demand also showed significant resilience, growing 8 per cent to 48.9 tonnes. Predictably, as lockdown eased and normalisation efforts were phased in, imports in Q4 rose 19 per cent year-on-year, pointing to the positive impact of pent-up demand.

This can be expected to continue into 2021 as further normalcy returns and steady course of reforms strengthens the industry, he added.

With the implementation of mandatory hallmarking in June 2021, the establishment of the international bullion exchange in GIFT city and Retail Code of conduct under the aegis of the industry steering committee, industry growth will be qualitatively superior underpinned by global ambitions and strong awareness of trust and transparency, WGC said.

Demand for gold in India for Q4 2020 was at 186.2 tonnes down by 4 per cent as compared to overall Q4 demand for 2019 (194.3 tonnes). India’s Q4 2020 gold demand value was Rs 82,790 crore, an increase of 26 per cent in comparison with Q4 2019 (Rs 65,890 crore).

Total jewellery demand in India for Q4 2020 was down by 8 per cent at 137.3 tonnes as compared to Q4 2019 (149 tonnes). The value of jewellery demand was Rs 61,060 crore, an increase of 21 per cent from Q4 2019 (Rs 50,530 crore).

The total investment demand for Q4 2020 was up by 8 per cent at 48.9 tonnes in comparison with Q4 2019 (45.3 tonnes). In value terms, gold investment demand was Rs 21,730 crore, an increase of 41 per cent from Q4 2019 (Rs 15,360 crore).

Total gold recycled in India in Q4 2020 was 21.7 tonnes, as compared to 29.1 tonnes in Q4 2019.