One interesting development during these months of lockdown has been the rapid rise in digital engagement with several tech initiatives by top jewellers to woo buyers. Digital platforms selling allocated gold through wallets also recorded sharp rise in volumes, along with significant activity in gold exchange-traded funds (ETFs) following a prolonged period of quiescence, he pointed out.
Total gold recycled in India in the third quarter was 41.5 tonnes, up by 14 per cent compared to 36.5 tonnes in the same quarter of 2019.
Due to higher prices, recycling increased by 14 percent to 41.5 tonnes, though inventory rationalisation by jewellers and steep discounts in the market did impact full price recovery for sellers, he observed.
Meanwhile, he said, imports resumed in anticipation of festival demand as supply chain-related restrictions were eased, growing from 9 tonnes in the previous quarter to 90.5 tonnes, he said.
Looking ahead, we typically witness an upswing in gold demand in the fourth quarter on account of Dussehra, Dhanteras and other festivals coupled with a busy wedding season post-harvest.
This year, a good monsoon notwithstanding, price and COVID-19 shadow will affect sentiment, though we can reasonably expect at least a part of the pent-up demand to surface, Somasundaram said.
As weddings and festivities become low-key affairs, savings on other spends could be channelised into gold, he added.
A sense of cautious optimism has returned among the trade stemming from the fact that the society is gradually learning to live with COVID-19, he said.
However as we are still reeling under the impact of the pandemic and fear of second wave of infections without clear sight of many variables on consumer behaviour, volatile prices or length of the disruptions, we will not be able to quantify the impact on the full year gold demand in India other than to say that demand could be multi-year low, he added.
But, post COVID-19 demand is likely to surge like post-2009, when demand was 642 tonnes and rose sharply to 1,002 tonne in 2010 and continued to be high in 2011 and 2012, he added.