Gold Jewellery Demand Has Increased By 60% In India, In Q3

Gold jewellery remained at the top position considering gold demands in India in Q3. The precious metal is considered auspicious among Indians and the festive seasons of Diwali and Dhanteras are expected to keep the gold jewellery demand up. According to the latest World Gold Council report on gold demand, "Jewellery demand in India in Q3 increased approximately 60% both q-o-q and y-o-y, due to strong pent-up demand, a rebound in economic activity and lower gold prices. Having been locked down for much of Q2 to combat the severe second wave of COVID-19, jewellery demand bounced back sharply in the third quarter."

However, northern India has outperformed southern India, as some states, notably Kerala, were impacted by the Pandemic by massive contamination. Hence, the states have faced major economic troubles and tighter restrictions. WGC has also mentioned the recent mandatory hallmarking system by the union government. WGC stated, "Hallmarking activity has gradually increased after some initial teething issues following the introduction of mandatory hallmarking. The industry continues to adapt to the system, which should ultimately improve transparency and give consumers greater confidence in the purity of the gold they buy."

Swift vaccination drive in the country and a strong end to the monsoon season have furthered catered to this increased demand. Retailers are now expecting a strong demand even in the upcoming Q4 wedding and festive season built up their inventories in preparation.

Global picture for gold jewellery demand

The global picture for gold jewellery demand is not as captivating as Indian demands. However, the global jewellery demand has seen ongoing recovery but has yet to regain pre-pandemic levels. WGC mentioned, "The jewellery market continued to recover from 2020's pandemic-driven weakness: Q3 demand was 33% higher y-o-y at 443t. Despite the strong recovery, quarterly jewellery demand remains relatively subdued from a longer-term perspective, 12% below the five-year average. China, India, and the Middle East were the centres of growth, although Western markets also saw recovery." But, Q3 demand was 6% below Q3 2019 and 12% below the five-year quarterly average.

At present, Y-t-d global jewellery demand has increased almost 50% than the same period in 2020. The US dollar value of jewellery demand has also hiked by 25% y-o-y to US$25.5 bn.

(Also read: In Q3 Gold Demand Down 7% To 831 Tonnes: WGC)

"The lower average quarterly gold price offset the 33% increase in demand volumes. Nonetheless, this was the highest value for jewellery demand for a third-quarter in eight years. But the recovery in tonnage fell short of a return to pre-pandemic average levels", WGC said.

(Also read: What Is RBI Sovereign Gold Bond (SGB) Scheme? Benefits And Upcoming Tranches, 2021-2022)