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Gold consumption of India likely to falter in June quarter on Covid-19 lockdowns: WGC

29 Apr 2021 Evaluate

The World Gold Council (WGC) has said gold consumption of India is likely to falter in the June quarter as various states are imposing lockdowns to arrest rising COVID-19 cases, dampening the celebration of weddings and key festivals. Appetite for gold soared in the first quarter on pent-up demand after weddings were delayed in 2020 due to the COVID-19 pandemic. But an escalating crisis in India has prompted most state governments to impose curbs on the movement of people and asked non-essential business to close, dampening demand in the world's second-biggest bullion consumer.

Lower purchases could weigh on gold prices, which have recovered this year and risen 6% so far in 2021. But falling demand for gold imports could help narrow India's trade deficit and support the ailing rupee. Somasundaram PR, the managing director of the WGC's Indian operations said ‘Weddings, the Akshaya Tritiya (festival) are going to be a very muted affairs’. Gold consumption typically jumps in the June quarter due to weddings and key festivals such as Akshaya Tritiya, when buying gold is considered auspicious.

Somasundaram said India typically consumes around 200 tonnes of gold during the period but demand this year should be below that level. He said gold consumption in the second half of 2021 could rebound on pent-up demand and as economic activity recovers. India's economy is expected to grow by 11% in fiscal 2021/2022. Over the year, he said gold demand could be higher in 2021 than last year's 446.4 tonnes, which was the lowest since 1994.

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