India’s Q1 gold demand surges 57% to touch Rs 59,000 crores  

Total jewellery demand during Q1 2021 was up by 39 per cent at 102.5 tonnes as compared to 73.9 tonnes in Q1 2020. The value of jewellery demand was Rs 43,100 crores, registering a rise of 58 per cent from Rs 27,230 crore in Q1 2020.

Hyderabad: Demand for gold in India saw 37 per cent increase during the first quarter (Q1) of 2021 at 140 tonnes, compared to overall Q1 demand for 2020 at 102 tonnes, while in value terms, gold demand was at Rs 58,800 crores, an increase of 57 per cent in comparison with Q1 2020 at Rs 37,580 crores.

Total jewellery demand during Q1 2021 was up by 39 per cent at 102.5 tonnes as compared to 73.9 tonnes in Q1 2020. The value of jewellery demand was Rs 43,100 crores, registering a rise of 58 per cent from Rs 27,230 crore in Q1 2020.

Total gold recycled declined during Q1 2021 to 14.8 tonnes, compared to 18.5 tonnes in Q1 2020, a drop of 20 per cent. Net bullion imports in India in Q1 2021 was 301 tonnes, as compared to 83.1 tonnes in Q1 2020, registering an increase of 262 per cent.

Somasundaram PR, MD, India, World Gold Council said, “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 y-o-y in gold jewellery demand at 102.5 tonnes.”

“The average domestic gold price of Rs 47,131 per 10gm was 14 per cent higher year-on-year (y-o-y) but six per cent lower quarter-on-quarter and significantly, 16 per cent lower than the August 2020 peak Rs 56,000 per 10gm. Slides in prices below Rs 50K per 10gm removed a psychological barrier for the consumers and spurred bargain buying and wedding-related accumulation, releasing pent-up demand,” he added.

Indian retail gold investment demand also improved for a third consecutive quarter. Bar and coin demand grew 34 per cent y-o-y to 37.5 tonne – the strongest first quarter in India since 2015.

Influencing factors

A reduction in customs duty on gold, together with an appreciating rupee throughout much of the quarter, helped lower prices and presented significant buying opportunities for retail investors. Small bars (of 50g and 100g denominations) were reportedly hugely popular in Q1.

Official imports of gold surged during the quarter – jumping to a record high of 301 tonnes. Robust consumer demand, combined with stock building among the trade ahead of key festivals (including Akshaya Tritiya in May), were the primary drivers of the strong rise in imports, he noted.

The outlook for the coming quarter is, however, cautious. As lockdowns are re-imposed in various regions of the country in response to rising Covid-19 cases, consumer confidence has dipped. This is likely to impact wedding demand in Q2 2021.