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.
Despite a spike in COVID cases and rising prices that dampened retail demand for gold in India, imports in April came in above the 10-year monthly average indicating a continued recovery in the Indian gold market.
India imported 110 tons of gold in April. That’s 71% above the 10-year monthly average and compares with just .o5 ton in April 2020.
China and India rank one-two in global gold consumption, and through the first quarter of 2021, gold demand charted an impressive rebound in both countries.
China’s year-on-year gold consumption surged 93.9% as first-quarter demand rebounded to pre-pandemic levels. Meanwhile, official Indian gold imports hit the highest level in a decade in March.
There’s been some chatter in the financial media about the decline of the gold market. Gold is a relic of the past and crypto will replace it as the go-to safe haven and inflation hedge, according to some. But as host Mike Maharrey explains in this episode of the Friday Gold Wrap podcast, the demise of the gold market is greatly exaggerated. A lot of people still want gold. Mike also touches on the national debt in this episode. It’s even worse than most people think.
China has opened the door to billions of dollars in gold imports.
Reuters cites five sources indicating that Beijing has greenlighted the import of 150 tons of gold valued at around $8.5 billion at current prices. The report notes that China’s sudden appetite for gold could potentially “support global prices.”