High price and stricter restrictions imposed across India to contain the spread of Covid infections have hurt gold demand. The import of gold in April fell by 50.7%, settling at 3.54 metric tonnes (MT) against 7.19MT in March, according to the data issued by the Ahmedabad Air Cargo Complex.

With demand taking a hit in the retail sector, jewellers have reduced purchases. Moreover, the last fortnight of April saw a partial lockdown or self-imposed shutdowns which also affected retail demand.

“The market had recovered well in March with good demand and weddings were lined up,” said Jigar Soni, president, Jewellers’ Association of Ahmedabad (JAA). “However, as the cases of Covid-19 surged, the demand crashed in April.” Soni said that in the second half of the month, most jewellers observed self-shutdowns. “As a consequence, gold jewellery purchases once again took a hit,” Soni said. “As on date, the demand has reduced to 10%.”

The gold price stood at Rs 49,500 per 10 gram on April 23 in the Ahmedabad market. Gold trading came to a standstill from April 24 as jewellers across the city observed a self-shutdown from April 24 to 30. The state government imposed curbs on commercial complexes and shops from April 28.
Rising prices of gold was one of the reasons for the decline in gold demand.

“Jewellers and stockists have consistently reduced the purchases of gold in April due to weak retail demand,” said an Ahmedabad-based bullion trader. “The demand could remain soft over the next few weeks amid the rising Covid cases.”

The trader said a weakened US dollar, falling yields of the US treasury, and a correction in equity markets around the world pushed the demand for gold as a haven. It was spurred by the concerns about the impact of the second Covid wave on the economy.

Jewellers and bullion traders say that the demand is expected to take a further hit in May as many weddings planned around the Akshaya Tritiya Muhurat have been called off due to the pandemic.