Mumbai, Apr 29 (IANS): Consumer demand for gold is likely to weaken in the ongoing quarter due to the restrictions and lockdowns in wake of the second wave of Covid-19, according to a report by the World Gold Council (WGC).

"The outlook for the coming quarter is cautious. As lockdowns are re-imposed in various regions of the country in response to rising COVID-19 cases, consumer confidence has dipped. This is likely to impact wedding demand in Q2 2021," it said.

However, 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.

Demand for gold in India for Q1 2021 was at 140 tonne, 37 per cent higher than the overall demand in Q1 of 2020 (102 tonne). India's Q1 2021 gold demand was valued at Rs 58,800 crore, an increase of 57 per cent in comparison with Q1 2020 (Rs 37,580 crore).

The total jewellery demand in India for Q1 2021 was up 39 per cent at 102.5 tonne as compared to Q1 2020 and the total investment demand for Q1 2021 increased by 34 per cent to 37.5 tonne in comparison with Q1 2020 (28.1 tonne).

Somasundaram PR, Managing Director, India, World Gold Council said: "A combination of softening gold prices, buoying consumer sentiment following sharp pick-up in economic activity and return of social activities like weddings supported a 39 per cent growth y-o-y in gold jewellery demand at 102.5 tonne."

He added that the average domestic gold price of Rs 47,131/10 gram was 14 per cent higher y-o-y but 6 per cent lower q-o-q, and 16 per cent lower than the August 2020 peak of Rs 56,000/10 gram.

"Robust consumer demand, combined with stock building among the trade ahead of key festivals (including Akshaya Tritiya in May), were the primary drivers of the strong rise in imports," he said.