This was because of the closure of retail shops and factories after the nationwide lockdown was imposed to prevent spread of Covid-19, and a sharp increase in the metal’s price.
India’s gold demand declined by a staggering 70 per cent in the quarter ended June 30 of calendar year 2020 (Q2CY20), the lowest quarterly figure in 11 years.
However, at 44 tonnes, gold jewellery demand fell to its lowest on record.
This was because of the closure of retail shops and factories after the nationwide lockdown was imposed to prevent spread of Covid-19, and a sharp increase in the metal’s price.
Meanwhile, China’s jewellery demand, which fell 52 per cent in the March quarter, improved in the June quarter and was down 33 per cent at 90.9 tonnes.
India and China contributed the most to the global fall in demand, which halved to an unprecedented 251 tonnes.
Data compiled by the apex industry body, the World Gold Council, showed that demand stood at 63.7 tonnes in Q2.
This figure was better only than the 40 tonnes demand seen in the March quarter of 2009, in the aftermath of the Lehman crisis.
As a result, gold imports stood at just 11.6 tonnes, a fall of 95 per cent, because of logistical issues and poor demand.
Dore imports plummeted to 3.5 tonnes as against 75.5 tonnes in the corresponding period last year.
While jewellery demand declined by 74 per cent in Q2, investment demand fell by 56 per cent in volume terms to 19.8 tonnes.
“The nationwide lockdown and high prices acted in combination to keep India’s gold demand to a record low at 63.7 tonnes during Q1.
"Barring a couple of days, retail jewellery stores remained shut for most of the period.
"Thus, the quarter was a washout for gold demand,” said Somasundaram PR, managing director, India, World Gold Council, while releasing the Gold Demand Trends report for the quarter.
Online trade played a significant part during the lockdown, as gold exchange-traded funds (ETFs) grew after being dormant for many years.
Digital gold, too, saw significant activity, though volumes remain negligible in the overall demand scenario.
Photograph: Rupak De Chowdhuri/Reuters
