As per the World Gold Council’s (WGC) latest report, consumers across the globe spent heavily on gold during the January-March period. The report suggests two major trends that have emerged during the last quarter.
A) There was a sharp YoY increase in jewellery demand across the globe, dominated by India and China.
B) The gold lost its steam as an investment avenue across the globe.
Strong Consumer Demand Globally
There was a sharp YoY increase in jewellery demand in India as well as the rest of the world during the January-March period. Global jewellery demand was up 52.4% YoY to 477.4 tn. Chinese consumers were the major buyers of jewellery as the demand shot up by 211.8% YoY. India and China together formed 55-60% of global demand.
Despite the strong consumer demand, the gold lost its shine as an investment avenue. Due to the constant softening of gold prices, gold ETFs witnessed a major outflow. As a result, global gold demand was down 23% YoY and flat sequentially at 815.7 tn.
Indian Consumers Latches On Gold
India continues to be a strong market of gold as both consumers as well investors show a strong appetite for it. Total consumption for gold in India, which includes jewellery, bars, and coins, witnessed a 37.4% YoY growth in January - March 2021. However, demand faltered by 24.8% on a QoQ basis.
Demand for jewellery remained robust in India, with volumes up 38.3% YoY to 102.5tn. It was boosted by the ease in lockdown restrictions, lower gold prices, lower customs duty, and wedding demand. Investment in gold also surged up during this period, helped by the bottoming out of gold prices. Demand for bars and coins rose 33.8% YoY to 37.5t in 1QCY21.
Titan, the major player in the gold and jewellery segment, also indicated that gold coin and bar sales were disproportionately higher during Q4FY21.
The company also suggested that jewellery players have deployed omnichannel strategies and higher usage of technology. It makes them better equipped to deal with lockdown-related disruptions.
Titan is also expecting strong pent-up demand once stores reopen, especially given the low gold prices (15% lower from its August 2020 peak) and pent-up wedding demand.
