India’s gold demand down 35 pc to 446.4 tonne in 2020; rebound in 2021 likely

India’s gold demand dropped by over a third in 2020 settling at 446.4 tonne on the back of pandemic-induced lockdowns and lifetime high prices, but a rebound this year is most likely, as normalcy returns and steady course of reforms strengthen the industry, according to the World Gold Council (WGC).

India’s gold demand fell by 35.34 pc to 446.4 tonne in 2020. In 2019, the total gold demand was 690.4 tonne, according to the WGC’s 2020 Gold Demand Trends report.


Gold demand in value terms in 2020, witnessed a decline of 14 per cent and stood at Rs 1,88,280 crore, compared to Rs 2,17,770 crore in 2019, according to the WGC data.

Meanwhile, the total jewellery demand in volume terms in 2020 was down by 42 per cent at 315.9 tonne, compared to 544.6 tonne in 2019, while in terms of value it dipped by 22.42 per cent to Rs 1,33,260 crore, from Rs 1,71,790 crore largely on account of COVID-related restrictions.

The country’s net gold imports dipped by 47 per cent during 2020 to 344.2 tonne compared to 646.8 tonne in 2019, it added.

However, as lockdown eased and normalization efforts were phased in, imports during the last quarter rose 19 per cent year-on-year, pointing to the positive impact of pent-up demand, according to WGC Managing Director, India, Somasundaram PR.

The fourth quarter (October-December) of 2020 saw improved consumer sentiments as gold demand was down by only 4 per cent at 186.2 tonne, compared to overall demand in the same quarter of 2019 at 194.3 tonne.

“In the fourth quarter of 2020, the festive period and the ensuing wedding season revived hopes and drew in jewellery demand worth 137.3 tonnes, the strongest quarter in the year. Investment demand also showed significant resilience, growing 8 per cent to 48.9 tonnes,” Somasundaram PR told PTI.

He pointed out that this can be expected to continue into 2021 as further normalcy returns and steady course of reforms strengthen the industry.

“With the implementation of mandatory hallmarking in June 2021, establishment of the international bullion exchange in GIFT city and Retail Code of conduct under the aegis of the industry steering committee, industry growth will be qualitatively superior underpinned by global ambitions and strong awareness of trust and transparency,” he said.

From the consumers’ perspective, there is acceptance of the current high price level as the new normal, he stated.

In addition, current high stock indices and low interest rates will add significant weightage to gold amidst inevitable return of celebrations and festivities, he said.

“We could see a strong spurt in gold demand for the next few years, a repeat of what happened after a sharp drop in 2009. In such a scenario, the current high tax on gold increases the lure of smuggling, so duty cut to reasonable levels is absolutely necessary, along with tax concessions for recycling gold, innovations and digital interventions,” he said.

The year 2021 will likely set a trend of long-term growth in Indian gold demand and the benefits of such growth can be explicitly captured if coordinated policy measures are sustained, making gold a mainstream asset class, he noted.

Once the demand picks up during the second half of this year, gold imports are expected to normalize, he added.

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