Gold demand declines due to rising cases of Kovid, big, fat Indian weddings

Marriages are a major source of demand for gold in India and cases are on the rise as the country begins the hectic wedding season, which begins in the second half of January and continues till April or May. India recorded more than 200,000 new cases on Thursday, up from less than 10,000 new daily infections during the previous month. This is leading to increased restrictions on mobility and the size of large gatherings as regional governments race to contain infections.

Ashish Pethe, chairman, All India Gem and Jewelery Domestic Council, said, “At retail, we are seeing less footfall as people are a little worried.” Demand will remain sluggish in the quarter through March, but jewelers are “cautiously optimistic”. Because the current virus wave seems relatively mild, he said.

The expected fall in consumption comes after a fall in sales in the second half of 2021, potentially taking imports to a six-year high after the easing of restrictions related to the pandemic. Earlier, demand was curtailed for almost two years as the coronavirus caused many weddings to be postponed.

Still, sales may not suffer as much in the latest wave as states try to avoid a complete lockdown and shops can still operate, said Kumar Jain, owner of UT Zaveri store in Mumbai’s biggest bullion market. He said people are still going ahead with their weddings and some of them are taking their festivities to states where there are less restrictions.

Gold sales rose 37% to 140 tonnes in the March quarter, according to data from the World Gold Council, which has yet to release numbers for 2021. Full-year demand growth is projected—sales have increased from 2020 onwards, but consumption will normalize to an average of 750 tonnes in 2022, Pethe said, without providing estimates for 2021.

“Maybe things will improve around March and the wedding season will pick up in April and May,” Pethe said. The second quarter will likely decrease over the first few months.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.