Many Indians Selling Off Their Gold To Secure Family Budgets During COVID

New Delhi: It is well known that Indians have a penchant for gold jewellery. They are also known to invest in gold the moment they have enough cash and stash it away in bank lockers to be used in the event of a financial crisis.

Well, that financial crisis has come. The pandemic has forced many Indians, especially those in rural areas, to sell off their gold, stated a report in Bloomberg. There are fewer banks in rural areas and liquidating gold is an easy option.

The report quoted Chirag Sheth, a consultant at London-based Metals Focus Ltd as saying that the second wave has likely caused much more financial distress which could lead to more outright sales of gold, unlike in 2020 when consumers chose to take loans against their stash of gold.

Gold scrap supplies that include gold melted to make new designs may surpass 215 tonnes and surge to the highest in nine years in case of a third wave, he said. Higher local supply also indicates that gold inflows would decrease.

Sheth said that people were just about recovering from the financial problems that arose from the first wave when the second wave hit. Again, a third wave is around the corner which means more lockdowns and more job losses. August and September may see increased distress sales of gold.

Moreover, Indians have been cutting down on gold purchases in the past couple of years due to a weak economy and virus outbreaks. According to the World Gold Council, gold sales fell to the lowest in two decades in 2020.