International gold prices broke all previous records to reach all-time high of $2,067 troy ounce in August 2020. Gold prices have risen by a massive 29.6 per cent in 2020-21. This momentum in prices is expected to continue during the remaining part of the year as well. International gold prices average was at $1,462.2 in 2019-20. While a slowing global economy kept gold prices on the upside, outbreak of the COVID-19 pandemic further helped gold prices to rally and break all records.
Increase in domestic prices was, in fact, faster than that of international prices due to discrepancies in rupee valuation. A weaker rupee against the US dollar lifted gold prices in India. Gold prices in India touched its all-time high at Rs 55, 950 per 10 gram on 7 August 2020. In 2020-21 so far, domestic gold prices have risen by 45 per cent.
Owing to poor demand, gold imports nosedived by 57 per cent during the first half of the year. Imports hit rock bottom during the June 2020 quarter with overseas purchases falling by a whopping 95.5 per cent. Gold imports almost vanished with imports falling by more than 90 per cent during April 2020 to June 2020 on YoY basis.
Sales revenues of gems and jewellery industry nosedived by a whopping 85 per cent during the June 2020 quarter. Big jewellery players like Titan Company, P C Jewellers and Tribhovandas Bhimji Zaveri (TBZ) reported a 62.3 per cent, 96.6 per cent and 81.5 per cent decline in their top line, respectively.
Overall gold demand plunged by average 37.4 per cent in 2020-21 till now. COVID-19 pandemic has disrupted traditional brick and mortar business model of Indian gold retailers.