Demand for gold could see a sharp spike in India once normalcy is restored on the Covid front, according to the World Gold Council (WGC). India is the second-biggest consumer of gold in the world after China.
The market development organisation for the gold industry said Dhanteras and the upcoming season which has more auspicious wedding days compared to the previous year appear positive for demand. For the gold investment segment, however, attractive equity markets and volatile gold prices are strong headwinds.
According to the latest ‘Gold Demand Trends’ report, demand in India during April-June 2021 was at 76.1 tonne, an increase of 19.2% as compared to the year-ago period. In value terms, it stood at Rs 32,810 crore, a rise of 23% compared with Rs 26,600 crore. Total gold imports in India in Q2 2021 was 120.4 tonne, compared to 10.9 tonne in Q2 2020.
“Q2 2021 was marked by widespread regional lockdowns following a rise in Covid infections. Unlike the previous year when a national lockdown took businesses by surprise, this quarter was relatively better as businesses were more prepared. Demand in Q2 2021 showed a 19.2% Y-o-Y increase on a very low base of Q2 2020. The impact was, however, severe as it muted demand during Akshaya Tritiya and wedding season in Q2,” Somasundaram PR, regional CEO (India) of WGC, said.
He said the outlook for H2 2021 is yet uncertain, as consumer confidence and business response are subject to the impact of a looming threat of the third wave of Covid and the pace of economic recovery. “One view is that given the pace of vaccination and the sero survey results, as a society, we may learn to live with Covid and its variants, ensuring businesses and sales become more resilient,” he said.
Globally, consumer investment in gold increased in the second quarter of 2021, but some investors were less bullish, according to the report. Total global demand was seen at 955.1 tonne, down from 960.5 tonne in the same period of 2020 and 1,132 tonne in the second quarter of 2019.