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The demand for gold revived sharply from what it was when the COVID-19 pandemic was at its peak during 2020. As per World Gold Council (WGC), during the quarter ending September 2021, in India, demand for gold increased 47% year-on-year (YoY), i.e. 139.1 tonnes in comparison to 94.6 tonnes a year ago, around 123.9 tonnes higher than what was recorded in the previous September 2019 quarter.
There was a surge in demand for gold and diamond jewellery because of significant pent-up demand, economic rebound, festive-related gift purchases, wedding purchases, and soft gold prices. Investment in gold bars and coins have also increased 27% y-o-y to 43 tonnes between July and September 2021. As per WGC, on a regional level, North India overtook South India, as a few southern states were severely affected by a higher number of COVID-19 cases and thus had a severe impact on the jewellery store operations as well.
The pandemic situation improved with dipping infection rates and higher vaccination numbers, resulting in the economy’s revival. Softer gold rates generated tremendous interest amongst consumers. WGC anticipates that the demand for gold will pick up the pace since economic activity has resumed to normal in most of the states in India post the COVID-19 second wave.
On the global front, the demand for gold sank by 7% y-o-y and 13% quarter-on-quarter, i.e., to 831 tonnes. This happened because of outflows (27 tonnes) arising out of gold-backed exchange-traded funds (gold ETFs). Gold rates averaged $1,790 per ounce (oz) all around the quarter – dipped from an all-time high of $1908 levels during the September 2020 quarter.
Gold imports increased to around $24 billion between April and September 2021, as per the commerce ministry data that was recently released, close to four times the $6.8 billion of imports in the subsequent period last year.
For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in
Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.
