Demand for gold jewelry is crashing in China & India, consultant finds
According to the group’s commodities economist Alexander Kozul-Wright, gold imports plunged 50 percent year-on-year in the first two months of 2020. Withdrawals from Shanghai’s gold exchange tanked 56 percent during the same period. Physical sales in critical global markets, China and India, have fallen off a cliff so far this year.
Kozul-Wright says that he doesn’t expect to see a significant rebound in gold jewelry demand, as gold prices remain high against the Chinese yuan and consumers remain subdued as the country starts to recover from coronavirus pandemic.
”That said, China’s gold imports may stage a comeback in the second half of the year, assuming that economic growth continues to gather pace and households start spending again,” he added.
Talking about India’s gold market, he quoted trade data that showed the country’s imports of the yellow metal sinking by a month-to-month 73 percent in March.Also on rt.com Gold rush amid coronavirus & economic uncertainty leads to shortage in small bars & coins
“It appears that inflated local currency prices slashed jewelry demand in India’s price-sensitive market. And with anecdotal evidence suggesting that domestic gold purchases ceased altogether after the government imposed a three-week lockdown [on March 24], India’s gold imports could sink even lower in April.”
Although demand for gold jewelry is expected to be weak through 2020, investment demand is projected to dictate gold prices this year. “In our view, the price of gold will only begin to fall once the global spread of Covid-19 is brought firmly under control,” said Kozul-Wright. According to Capital Economics, gold prices could see the year out at $1,600 an ounce.
Gold prices soared to seven-and-a-half-year highs last week, after the US Federal Reserve announced another a $2.3 trillion stimulus package to support small and medium-sized businesses impacted by the pandemic. On Monday, the yellow metal was trading down 2.6 percent at $1,690 an ounce.
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