Demand for gold and silver in India experiences a strong recovery in the second half of 2021; next year will be even better – report
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(Kitco News) – Demand for gold and silver in India recovered sharply in the second half of 2021, as jewelry purchases and investments in physical metals increased following a slowdown caused by COVID-19 restrictions and uncertainty.
This was reported by Metals Focus, a leading independent precious metals consultancy, following a trip by its local team to more than ten cities in India to assess the situation on the ground, which revealed strong demand. gold and silver.
Looking first at gold, Metals Focus said the strong recovery was led by party and wedding buys.
Importantly, aside from noticeable pent-up demand, as many weddings had been postponed in 2020 and the first half of 2021, the consultancy noted that the decline in gold prices also supported the surge in buying. of consumers.
According to the report, the pandemic has boosted Indian public confidence in gold, as the previous price rally helped many people get through the crisis; gold offered a certain degree of security, since it could easily be used as collateral to secure loans.
“This, combined with improved economic dynamics and consumer confidence, has resulted in an increase in the average retail ticket size, 15-20% compared to pre-pandemic activity. “, said the authors of the report.
Another interesting development noted by Metals Focus is how jewelers across the country are aggressively restocking after drastically cutting inventories last year.
“Many are now more confident about the outlook for jewelry demand and are therefore looking to increase inventory levels; we estimate an increase of at least 5-10% in retail inventory compared to last year, ”the consulting firm said.
It is important to note that the strength of demand is not limited to jewelry, but also extends to physical investment products, especially Diwali.
Silver has also benefited from a noticeable improvement in market fundamentals over the past four months, Metals Focus continued.
The advisory firm said its recent meetings found this reflected economic momentum, an easing of foreclosure restrictions and comparatively lower silver prices. This, along with the six-month holiday and wedding season, has been a big contributor to the recovery in demand for money, although it is still expected to be below pre-pandemic levels.
In recent years, the demand for silver jewelry has benefited from increased purchases by millennials and working women. Even so, as restrictions have eased, colleges and offices continue to operate from home, which has impacted purchases from these consumers.
That said, other consumer segments continue to drive demand for silver jewelry and silverware. The strength of the former is mainly due to rural India, where good monsoons (reinforcing expectations of a good harvest), higher government minimum support prices all contributed to the economic recovery.
In contrast, the demand for silverware is concentrated in urban India, which has benefited from the return of social events and weddings.
Looking ahead to next year, Metals Focus expects demand for gold and silver in India to continue to improve, mainly driven by strong economic growth, relatively stable precious metal prices and a pent-up demand.
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