MUMBAI:
According to a report from Motilal Oswal Financial Services, total gold consumer demand in India which includes jewellery, bars and coins, witnessed a 35.8% growth QoQ to 86.6t. On a YoY basis the demand was still down 30.1%/49.2% for 3QCY20/9MCY20.
Jewellery demand was more severely affected with volumes down 48% YoY to 52.8t in 3QCY20. The demand was impacted by (a) recurring lockdowns, (b) unprecedented gold prices, and (c) inauspicious periods based on religious beliefs. Notably, there was a modest sequential recovery of 20% QoQ in the gold jewellery demand. While jewellery demand was muted, gold bars and coins saw a sharp surge in the quarter. With the continued momentum in gold price rise, consumers perceived gold bars and coins as a lucrative investment option. At the same time, upbeat rural economy, which contributes 60% to total Indian gold demand, also pushed up bar and coin demand outside urban areas.
Bars and coins demand were up 51.1%/70.9% YoY/QoQ to 33.8t in 3QCY20. As part of 2QFY21 results commentary, Titan indicated that gold coins and bars were 14% of sales for the quarter compared to 3% in 2QFY20.
Net bullion imports, which contribute 85-90% of India’s gold supplies, saw a sharp recovery in 3QCY20 after a deep plunge in the quarter before that. According to Motilal Oswal Financial Services report, while gross imports and exports both plunged sharply in 2QCY20, the revival in exports was much lower than that in imports in 3QCY20. Accordingly, while net bullion imports had fallen 96.4% YoY to just 9t in 2QCY20 amid stringent lockdowns, the volumes saw a sharp rebound to 90.5t in 3QCY20, up 8.2%. Although the growth is on a soft base of 3QCY19, it comes after 4 consecutive quarters of decline. Motilal Oswal Financial Services believes this rebound an indicative of jeweller confidence in the strong festive and wedding demand anticipated in 4QCY20.
India and mainland China have historically been contributing ~55-60% of global jewellery demand and ~40-45% of global bars & coins demand. With challenges due to Covid and rising gold prices, there was a 48%/24.7% YoY decline in jewellery demand in India/mainland China in 3QCY20. Global jewellery demand was down 28.9% YoY to 333t in the quarter. However, there was sequential recovery with volumes rising 32.4% QoQ globally and 20.1%/31.3% QoQ in India/mainland China. On the other hand, there was a sharp increase in demand for bars & coins in both India and mainland China by 48.7% YoY and 34.9% YoY, respectively in 3QCY20. Overall global bar & coin demand was up 48.7% YoY as rising gold prices led to gold being seen as an attractive investment option.
