Gold demand in India was healthy in September and the outlook is strong moving forward.
Healthy retail demand in September drove the local price briefly into a premium of $2 to $3 per ounce early in the month. It was the first time gold had been in premium since May.
Indian silver imports are on pace to triple this year as investors bet the white metal is primed to rebound and outperform gold in the near future.
Silver prices have dropped to 2-year lows, and the silver-gold ratio has risen to nearly 90-1, signaling that the white metal is significantly undervalued compared to gold.
Gold demand in India was strong in May with retail sales rebounding and imports up both month-on-month and year-on-year.
Gold demand in India strengthened in October despite higher prices. This continues a rebound in the world’s second-largest gold market after it was pummeled by government policies during the coronavirus pandemic.
The recovery in the Indian gold market remained on track in September with strong imports and investment demand.
India imported 89.5 tons of gold in September, according to the latest data from the World Gold Council. While that was down 21% from the five-month high we saw in August, it was still far above the import totals in September 2020 as the response to COVID-19 ravaged the Indian economy. It was also significantly above import totals in September 2019 — prior to the coronavirus pandemic.
India’s gold imports hit a 5-month high of 121 tons in August, a further sign of recovery in the world’s second-largest gold market.
After being put on pause due to a coronavirus surge, the recovery of India’s gold market appears to be back on track.
Chinese gold demand rebounded sharply in the first half of 2021 after plummeting in 2020, according to data released by the China Gold Association (CGA).
India ranks as the second-largest gold-consuming country in the world, second only behind China, but demand has languished for the last couple of years. The pandemic crushed demand, particularly for gold jewelry, but record-high gold prices in rupee terms and government policy put a drag on the gold market even before COVID-19. There were signs of a turnaround late last year and it continued through the first quarter of 2021. The most recent wave of COVID-19 stalled the gold Indian gold market’s recovery, but it appears to be regaining steam.
Gold has served as a lifeline for Indians pummeled by the economic storm caused by the government response to the coronavirus pandemic.
The Indian government’s response to the first wave of COVID-19 ravaged the economy. As a result, many banks were reluctant to extend credit due to fear of defaults. In this tight lending environment, many Indians used their stashes of gold to secure loans. As Indians battle the second wave of COVID-19, many Indians have now turned to selling their gold outright in order to make ends meet.
