Gold demand in India has dropped 30 per cent in the July-September quarter to 86.6 tonnes compared with 123.9 tonnes in the corresponding quarter of 2019. Covid-19 related disruptions and high prices of the yellow metal have dampened demand, according to the World Gold Council.

Although a marginal recovery is expected in the October-December quarter, driven by festive demand, the overall demand for the year is likely to remain under pressure given the current situation and market volatility.

Jewellery demand was down 48 per cent in volume terms and 29 per cent in value terms during the quarter. Unlike jewellery, investment demand was up 51 per cent in volume terms and 107 per cent in value terms, representing a shift in consumer preference for bars and coins.

“In the third quarter of 2020, gold demand fell 30 per cent because of Covid related disruptions, bleak consumer sentiment, high prices and volatility. This is, however, better than the second quarter where there was a 70 per cent drop. This has been partially because of the easing of lockdown and some low prices in August,” said Somasundaram PR, managing director, India, World Gold Council.

“Looking ahead, we typically witness an upswing in gold demand in the fourth quarter on account of Dussehra, Dhanteras and other festivals along with a wedding season post-harvest. This year, a good monsoon notwithstanding, the price and Covid shadow will affect sentiment, though we can reasonably expect at least a part of the pent-up demand to surface,” he said, adding that as weddings and festivities become low key activities, savings on other spend could be channelised into gold.

World Gold Council further said global gold demand has dropped 19 per cent to 892 tonnes in the third quarter compared with the year-ago period. This was the lowest quarterly total since the third quarter of 2009. Even as the overall demand declined, the quarter saw significant growth in investment demand, which rose 21 per cent. Investors globally bought 222.1 tonnes of gold bars and coins and an additional 272.5 tonnes through gold-backed ETFs.

“Focus right now is on the US presidential elections although increasing virus numbers is again posing a threat to global growth. Market participants will keep an eye on the ECB policy meeting and also on the Q3 GDP data expected from the US, which could keep the volatility high. Broader trends on Comex could be in the range of $1865-1895 and on domestic front prices could hover in the range of Rs 50,120-50,750,” said Navneet Damani, vice-president-commodities research, Motilal Oswal Financial Services.