Lockdowns, high price & inauspicious days mute jewellery demand

Besides lockdowns, gold breaching the crucial Rs 50,000 level and inauspicious periods of Pitru-Paksha and Adhik Maas discouraged buying in the gold loving nation.

Business Desk, ETV Bharat: Though demand for jewellery staged a modest recovery when compared to April-June 2020 levels, it has dropped 48% in July-September period on a year-on-year basis.

As per the latest data released by the World Gold Council (WGC) Thursday, the demand was at 52.8 tonnes in the September-ended quarter in the gold loving nation.

Besides the initial nationwide as well as the intermittent State-level and local lockdowns, the report mentioned other two factors for the fall in demand.

“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),” said the Gold Demand Trends for September.

The WGC pointed out that gold price hovering above the crucial Rs 50,000 mark has added to the woes.

“As the local gold price breached Rs 50,000/10gm – 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.”

Surge in jewellery mortgage

Interestingly, despite high prices, Indians have preferred mortgaging to sell the jewellery.

“Nonetheless, the weak picture for jewellery demand has not translated into a surge of selling by Indian consumers. Instead, there has been an increasing focus on the use of gold as collateral for loans,” pointed out the report.

It may be recalled India’s economy shrunk by around 24% in April-June 2020 period, which is one of the worst in recent memory.

Weak consumer sentiment was also reflected in the Reserve Bank of India’s consumer confidence survey, which showed the Consumer Confidence Index falling in September 2020 to a historic low of 49.9 from 53.8 in July.