India, sometimes also referred as Suvarnabhumi - the land of gold - had a freefall in the jewellery demand in the April-June quarter due to the nationwide lockdown, lost festival demand, and the higher gold price.
As coronavirus pandemic hit businesses across the sectors, the Indian jewellery industry faced a major blow during the nationwide lockdown. India, sometimes also referred as Suvarnabhumi – the land of gold – had a freefall in the jewellery demand in the April-June quarter due to the nationwide lockdown, lost festival demand, and the higher gold price. It fell 74 per cent on-year to 44 tonnes, according to a report by the World Gold Council. The WGC said that it is the lowest quarterly total in its series by some margin. In the first half year of 2020, the demand fell 60 per cent to an all-time low of 117.8 tonnes.
The strict lockdown imposed in late March continued until mid-May, encompassing the important gold buying festival of Akshaya Tritiya. While the physical stores were shut down, only those retailers with an online presence were able to cater to demand. As restrictions eased mid-quarter, activity started to recover in select regions. June saw further improvement, with the release of some pent-up demand. However, a lack of weddings and auspicious days in the month, along with recurring lockdowns in certain regions and the high and rising gold price, prevented a meaningful recovery in demand, the WGC report added.
The economic slowdown, job losses and restrictions on store operations meant consumers became more cautious in opening their wallets to buy gold. “High prices in India will be a deterrent. Prices do need to correct from current levels to see a major improvement,” said Sriram Iyer, Senior Research Analyst at Reliance Securities, told Financial Express Online.
While China and India were the biggest contributors to the decline in global H1 demand, it is expected that the demand will rise from China more than that in India. “We believe that jewellery demand will improve from both nations, however, we do see that China again will be driving the demand, rather than India due to higher import duty and taxes on the import of raw materials,” Sriram Iyer added.