Gold prices crashed to below $1,800/ounce on Tuesday night sending shock waves across the globe.
While the drop in gold was anticipated with the announcement of Pfizer’s Covid-19 vaccine, analysts didn’t expect the correction to be so swift and sharp.
Gold prices have dropped 14 per cent and silver 23 per cent from the highs in August.
In India, the drop in gold prices have come as a good news for people who had postponed wedding because of the pandemic. The 22k gold price, which was trading at ₹51,411/10 gram in August, is now at ₹44,861, as per data from IBJA.
Ashish Pethe, Partner, Waman Hari Pethe Jewellers, a jewellery chain in Maharsahtra, said, “Wedding demand will come back, but for that prices have to stabilise. If it continues to be volatile or keep showing downward movement, consumers will only wait on the sidelines”.
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Gold jewellery demand in India in the September quarter was 52.8 tonnes – though a good recovery from 44 tonnes in the June quarter, it was still down by a sharp 48 per cent over the same quarter last year.
In the September quarter, jewellery demand slumped in India as gold prices had crossed the ₹50,000 milestone.
Demand recovery
Gold jewellery demand may recover in Q4 (December 2020 quarter), if prices remain at the same level or drop further says, Somasundaram PR, Managing Director, World Gold Council. “There will be a definite comeback in the jewellery demand in Q4 as there were no purchases at all in Q2 and very little in Q3. Most of the events that have been re-scheduled, will now start cropping up…”
“Q4 will be a sharp improvement over Q3 but given that prices have just begun to soften and they are still higher over last year, people may think before they buy or invest in gold and Q4 this year will not be better than Q4 of last year.”
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