India’s gold consumption showed a 37 per cent increase to 140 tonnes in Q1 2021 in comparison with the first quarter of 2020, which saw a slump in gold demand owing to pandemic-related lockdown restrictions. This number is, however, lower than the last two financial quarters which was 86.6 tonnes in Q3 of 2020 and 186.2 tonnes in Q4.
While Q1 of 2020 saw a gold jewellery demand of 73.9 tonnes, the demand for gold for the same period of January to March in 2021 saw a demand of 102.5 tonnes. This increase of 39 per cent in jewellery demand is owing to the easing of lockdown restrictions which had a positive effect on consumer sentiment. The decrease in gold prices is also a contributing factor in encouraging gold buying sentiments among customers. The slide of prices below the Rs. 50,000 mark to an average of Rs. 47,131 per 10 grams helped the increase in gold demand.
An ongoing increase, however, is a matter of doubt given the surge in COVID-19 cases in the country owing to the second wave of the pandemic. This, coupled with the increase in lockdown restrictions that extend to the scale of weddings taking place, is also expected to create another slump in demand.
In a statement, the World Gold Council India’s managing director Somasundaram PR said, “This is likely to impact wedding demand in Q2 2021. Digital and omni-channel retail strategies developed over the last year by many players may cushion the drop unlike Q2 2020 but the current crisis is beyond just economics and logistics, therefore, sentiment may be affected till large scale vaccination is achieved.” He also added that consumer confidence will hugely depend on vaccination drives and the growth rate of COVID-19 cases in the country.