Gold demand has surged 37 per cent during the JanuaryMarch quarter of 2021. Against a demand of 102 tonnes of gold in the first quarter of 2020, demand has surged to 140 tonnes in the first quarter of 2021 despite prices rising by 14 per cent.

While jewellery demand at 102.5 tonnes during the quarter was up 39 per cent, investment demand at 37.5 tonnes was up 34 per cent compared to the first quarter of 2020.

The World Gold Council on Thursday said that the expectation about prices have changed with the current price of around Rs 47,000 more acceptable among buyers. The average domestic gold price of Rs 47,131 per 10 gram is 14 per cent higher compared to the corresponding quarter a year ago and more significantly 16 per cent lower than the Rs 56,000 per 10 gram in August 2020.

“This (140 tonnes) on its own is not one of the best historical figures. We have normally seen around 190 tonnes kind of demand. But it is still a significant jump of 37 per cent over last year. This is despite the fact that the price as compared to last year is 14 per cent higher.”

“Last year the buying was low as people thought that a price of around Rs 41,000 is a significant increase and people were not willing to look at anything above Rs 38,00039,000 as a sustainable price. As a result they were actually waiting to see how the prices would react. This quarter we saw a price of around Rs 47,000 range. Yet buying was up 37 per cent. This signifies that the consumers are getting used to prices,” said Somasundaram PR, managing director, India, World Gold Council.

He added that a reduction in customs duty on gold, together with an appreciating rupee throughout much of the quarter has presented a significant buying opportunity for retail investors.

The industry body, however has placed a cautious outlook for the second quarter. “As lockdowns are reimposed in various regions of the country in response to rising Covid19 cases, consumer confidence has dipped. This is likely to impact wedding demand during the Q2 of 2021. Digital and omni channel retail strategies developed over the last year by many players may cushion the drop unlike Q2 2020 but the current crisis is beyond just economics and logistics. Therefore sentiment may be affected till large-scale vaccination is achieved,” World Gold Council said.

Global demand for the yellow metal at 815.7 tonnes was a 23 per cent drop on a year on year basis as gold backed exchange traded funds saw an outflow of 177.9 tonnes.

Analysts anticipate volatility in gold prices to remain. “Market participants will keep an eye on the US Q1 GDP data and weekly jobless claims scheduled later in the day which could trigger further volatility in the market. Broader range on Comex could be between USD 17751798 and on domestic front prices could hover in the range of Rs 47,00047,550,” said Navneet Damani, vice president – commodities research, Motilal Oswal Financial Services.