Gold jewellery demand in India has fallen 48% in the third quarter of 2020 to 52.8 tonnes, whereas the demand during the same quarter of last year was 101.6 tonnes. Globally, the demand went down to 333 tonnes for the quarter, a 29% drop from the 468.1 tonnes in the same quarter of 2019, said data from World Gold Council, which tracks wholesale gold sales globally.
Demand in China, the world's largest market for gold jewellery, has also fallen 25% to 119.1 tonnes compared to same quarter last year. India's gold jewellery demand had fallen 9% in 2019 to 544.6 tonnes from the 598 tonnes in 2018. If Indians had consumed 73.9 tonnes of gold jewellery in the first quarter of 2020, the demand fell to 44 tonnes in the second quarter, and recovered modestly to 52.8 tonnes in the third quarter.
However, gold as an investment in bar and coins has gone up in India by 51% to 33.8 tonnes from the 22.3 tonnes in the third quarter of last year. Total bar and coin demand was 145.8 tonnes in 2019, a fall of 10% from the 162.4 tonnes in 2018. Globally, bar and coin investment jumped 49% to 222.1 tonnes in Q3.
Total gold supply to India fell an estimated 11% to 136.2 tonnes for the third quarter of 2020, compared to 122.2 tonnes in the previous year same quarter. The total Indian supply of gold was 777.4 tonnes in 2019, nine percent less than the 853.1 tonnes in the previous year. India's official gold holdings as of September stands at 668.2 tonnes, which is 7% of the reserves.
Not only did Indian consumers have to cope with recurring lockdowns and unprecedented gold prices, but also the inauspicious periods of Pitru-Paksha and Adhik Maas discouraged buying during September (both periods are considered by Hindus to be inauspicious for gold purchases).
As the local gold price breached Rs 50,000 per 10gm - a major milestone for India - casual, impulsive purchases were curtailed in favour of needs-based buying. The prohibitive price level also encouraged a shift to lighter-weight plain gold pieces. Despite the positive monsoon season, consumer confidence remains heavily affected by the economic impact of the measures imposed to contain the pandemic, reasoned World Gold Council.