Gold continues to remain in demand

Last week passed in a much quiet phase for the world. It was rumoured that North Korean President was unwell, but later his spokesperson confirmed that he is alive and in good health. While crude did not receive much good news pertaining to demand and overflow, gold had a pretty stable week and an amazing monthly rally as gold began its journey at $1590 and gained nearly 8-9%, touching $1730 on Thursday.

Gold has continued to play its role as a safe haven, as central banks and governments have announced massive amounts of support for economies in lockdown, but this should now be in the price.

While the broader macro backdrop remains supportive for gold prices in the near term, real yields are being tracked more closely. Safe-haven buying has continued to support gold primarily through ETF inflows and continued retail investor demand. So if we see different economies starting to reopen, we might see some of that safe haven demand starting to ease.

U.S. unemployment is at a totally unprecedented, and unpredicted, 16.5 % of the workforce and may yet rise further, although moves to re-open a very limited section of the economy could mean this could soon be stagnating. On one side there is optimism the US economic figures will improve, but on the other side there is fear that the virus may not get contained and can spread further.

The U.S. economy tends to be the driver for the rest of the world but world virus data is at least equally alarming. Globally total COVID-19 known infections have already hit 3 million, with more than 210,000 deaths.  True, Asian and European figures – and even those in the U.S. - could already have peaked and be beginning on a downwards path, but the virus incidence in Africa and parts of Central and South America, where health systems are supposedly less able to cope with the virus spread, may only just be beginning.

 There’s also a chance of a second wave of infections if, and when, lockdown measures are eased, or if there is resurgence in the northern winter months.  COVID-19 is likely to be with us for some time yet and poses an enormous continuing threat to the global economy and to what we consider to be our normal way of life.

Prithviraj Kothari says that Investors now shift their focus to a U.S. Federal Reserve meeting ending on Wednesday and a European Central Bank (ECB) meeting on Thursday as major central banks once again take the stage as the global economy grapples with blows inflicted by the COVID-19 outbreak.

Even when the lockdown is lifted, the world will still be far from any kind of normality. The bigger risk then is economic collapse which brings in tension for the bullion dealers in India. But gold tends to benefit from widespread stimulus measures as it is often seen as a hedge against inflation and currency debasement.

Any kind of recovery will be gradual and gold will benefit from this prolonged phase of weakness which gives the top gold dealer in India reassurance. Economic indicators reveal that the numbers won’t be pleasing and that after lock down is eased we might face an economic collapse. We very well know that governments around the world are doing their best to spend parallel sums of money to boost the economy. Central banks have been pushing enough stimuli to keep the markets alive.

And hence even in the long term, Gold should remain in demand as a crisis currency in this environment which makes the future brighter for the yellow metal says RiddiSiddhi Bullions Limited.

Akshaya Tritiya 2020

Akshaya Tritiya will be celebrated across the country on Sunday, 26th April, 2020. But this year celebrations will be locked indoors given the pandemic situation. Akshaya Tritiya is considered to be a very auspicious day to buy gold and silver.

Economically this day is quite productive for marketers as they cash in on the festivity to boost their sales. Marketers indulge in high voltage advertisement campaigns especially the jewellery stores. In fact people in India and overseas book jewellery in advance and take delivery on Akshaya Tritiya day. It’s a day of frenzy buying for all precious metals especially gold. Sales on Akshaya Tritiya day usually increases four to five times compared to normal days, said a top gold dealer in India.

After Dhanteras, Akshaya Tritiya has been considered a festival where gold is bought in huge numbers. But this year, as the country witnesses a national lockdown, sales will be damp, remarked one of the bullion dealers in India.

He further explains that Akshaya Tritiya, which falls this year on April 26, is a lost opportunity for jewellers due to the nationwide lockdown. Jewellery sales have come to a standstill, he added. Factories are closed resulting in a massive loss for jewellery manufacturers and retailers. There were many weddings that were lined up in the month of May. But due to cancellations of public gatherings like weddings, jewellers won’t be able to cash in on the festive season.

It is almost a month since the lockdown was first announced and jewellery shops remain shut. Many fear they will not be able to capitalise on the huge opportunity to boost their revenues in a month traditionally known for the highest demand for ornaments.

Jewellers are concerned about the increasing financial stress this would cause them as they haven't done business since March. To make matters worse gold prices were ruling high at a time most Indians consider inauspicious for buying gold. All were well stocked to meet demand after this inauspicious period ended, when a large part of the off-take is usually attributed to the spike in marriages and the auspicious period of Akshaya Tritiya. However, with the current liquidity crisis, jewellers fear that whenever they are allowed to raise their shutters, customers will rush to sell their gold holdings in order to generate cash, commented Mr Prithviraj Kothari, Managing Director of RiddhiSiddhi Bullions Limited.

There are jewellers who are accepting bookings, but all deliveries are expected to be processed after the lockdown.

With offices shut and lack of liquidity in markets, sales figures will not even be close to impressive. World over the pandemic has affected all possible markets and precious metals have also not been spared.

We saw gold performing extremely well as the year started. In fact, jewellers in India were expecting to have good sales figures in the current years Akshaya Tritiya. But no one had ever predicted this drastic dip in global growth.

The precious metals markets, especially jewellers, will suffer a huge setback and it will take a long time for things to get back on track, concluded the ‘Bullion King Of India’.

But for the ones who are really keen to buy gold on Sunday, they need not worry as the option of buying gold online(in the form of ETF)  is always open, said an executive at RSBL. Sadly, physical gold shops will be shut and online would be the only choice available for gold buyers.