Demand for gold jewelry is crashing in China & India, consultant finds

Songapore (Apr 13)  Sharp contractions in gold imports by major consumers suggest gold jewelry demand is being battered, says investment research group Capital Economics, though it projects that safe-haven buying should ensure a near-term price rise.

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.

RTnews

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