How The COVID-19 Pandemic Is Disrupting India’s Gold Demand


Traditionally, gold is deeply rooted in Indian culture and held in high regard throughout the country. Holding gold is seen as a norm in India and is used in countless aspects of Indian life. Hindu’s are often seen adorning gold jewelry on auspicious events which dates back thousands of years to traditional Hindu texts. These texts depict Gods and Goddesses with gold which lead to the prestige associated with gold in modern Indian society. This significance filtered down to all aspects of life such as dowry’s, capital for land/business as well as a source of wealth.


In light of the current COVID-19 pandemic and the rampant rise in new cases within India, gold demand has significantly declined. Slowing economic activity and fewer weddings have been major contributors to the local gold slump. Historically, the June quarter is expected to reveal a spike in gold purchases. In addition to the current diminished demand, local restrictions have stopped gold and jewelry showrooms from opening. India being the second largest consumer of bullion will likely have an impact on spot gold.

New COVID-19 Cases: India

How the COVID-19 Pandemic is Disrupting India’s Gold Demand

Source: Chart prepared by Warren Venketas, Refinitiv

A slight consolidation can be seen in recent spot gold prices (see chart below) however, the safe-haven appeal may take over as global cases continue to rise. With the U.S. Dollar being a major influence on the price of gold, recent Dollar weakness has bolstered gold prices with the psychological $1800.00 level being broken above.


daily spot gold price chart

Source: Chart prepared by Warren Venketas, IG

The long-term downward channel has been pierced by a supportive Dollar and falling U.S. 10-year treasury yields. Topside channel resistance has held since early January 2021 where a brief break was curtailed shortly after. With yesterday’s daily price candle closing above $1800.00/oz as well as channel resistance, there could be more scope for further upside. The 38.2% Fibonacci level at $1838.60/oz will serve as initial resistance as gold trudges toward overbought territory on the Relative Strength Index (RSI).

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