Home >Markets >Commodities >Coronavirus, hurting jobs and loans, has Indians selling the family gold
A vendor wearing a protective mask arranges gold jewellery. (REUTERS)
A vendor wearing a protective mask arranges gold jewellery. (REUTERS)

Coronavirus, hurting jobs and loans, has Indians selling the family gold

Demand for jewelry made of the precious metal has plunged across the country during the pandemic, and many are hocking their gold

Investors across the globe are hoarding gold in the Covid-19 pandemic. In normally gold-obsessed India, there’s a glut, as struggling families stop buying and start hocking jewelry.

International investors have lifted the price of gold to all-time highs this year, trying to get their hands on more gold coins, bars and exchange-traded funds. Many are seeking shelter in the commodity from the storm of coronavirus and geopolitical concerns, such as the U.S.-China relationship and November’s U.S. presidential election.

At the same time, jewelry demand in India, the world’s second-largest consumer of gold behind China, plunged by 74% in the three months through June, according to the World Gold Council. That’s 124 metric tons less gold jewelry than a year earlier—about as much gold as the U.S. buys in a year.

A nationwide lockdown and fear of the pandemic has meant fewer Indians are visiting jewelry stores and holding weddings, which are the main sources of gold demand, say industry officials and jewelry store owners. The coronavirus crisis has also squeezed employment, incomes and small businesses, forcing many Indians to sell gold or borrow against it.

Gold bust
View Full Image
Gold bust

In July, Delhi resident Jasmine Nair had to sell her family gold—including the gold bangles her mother gave her for her wedding—when the family’s cash ran out at the same time as they had to pay for the construction of their new home.

“There was no other way to arrange the quick cash, which we really needed," she said.

With loans hard to obtain since Covid-19 hit, “Gold remains our last hope for survival," she said.

Jewelry chain owner B. Govindan says business is still only half of what it used to be before the virus arrived, and about one in five customers who come to his shops are selling jewelry rather than buying.

“We are hoping people will come back to buy gold from September-October when the wedding season begins," he said.

The imbalance of supply and demand is showing up in Indian gold prices, which have been significantly lower than global prices. India’s prices have been as much as $70 an ounce less than the global benchmark.

The companies that lend against gold have had people lining up to put the yellow metal down as collateral for short-term loans. Businesses and consumers have seen their incomes plummet and at the same time are unable to get new loans from their regular lenders who have become more cautious because the Indian economy has been hit so hard by the virus.

On Monday, India reported the worst impact from the coronavirus pandemic of any of the world’s major economies. The country recorded a 23.9% drop in gross domestic product in the three months ending in June, compared with the same period a year earlier.

Manappuram Finance, one of the biggest lenders specializing in gold loans, expanded a doorstep service nationwide this summer. Its agents show up on motorcycles to pick up, weigh and estimate the value of gold jewelry and approve loans at borrowers’ homes so they don’t have to risk going out and being exposed to Covid-19.

“From time immemorial gold has been the savings and insurance policies for India’s poor," said George Alexander Muthoot, managing director of Muthoot Finance, another lender specializing in gold-backed loans. “They need funding, and this is quick, easy financing."

The World Gold Council said this year is too unpredictable to make full-year projections, but the last quarter had the largest dive in demand it had ever recorded. Meanwhile, annual sales in India of recycled gold, or used gold jewelry, could jump to a new record of more than 120 metric tons, said P.R. Somasundaram, managing director for India at the World Gold Council.

“There is going to be a lot of pain in many categories of people particularly lower down the social pyramid," he said. “Our expectation is this year [gold recycling] could be very high."

India has the world’s biggest reservoir of gold in the form of bracelets, nose rings and other ornaments. It has more than 25,000 tons of it as jewelry, not only because it looks nice but it has always been the most important way Indians store wealth. Buying shiny things is even a part of regular religious ceremonies, for celebrations as well as for offerings to gods and saints.

The family gold is usually the last thing the average Indian will consider selling, so the rise in gold sales and borrowing against jewelry shows the pain many are going through. The pandemic has forced tens of millions back into poverty in India, economists say.

Padmavati Haripuri, who manages a Muthoot Finance branch in Hyderabad, says there are people lined up outside her branch every day.

“They need to pay school fees, they need to pay medical expenses," she said. “People are in need of money because they have no incomes and no business."

India’s central bank last month acknowledged gold-backed loans as an important avenue of finance, easing restrictions on gold lending by allowing loans of up to 90% of the value of the gold held as collateral, up from 75%. That means borrowers can get 20% more cash for their collateral.

Outside a Delhi jewelry store, Asha Goel and her sister waited for their turn to sell the gold bangles their mother gave them more than 20 years ago. They needed the money to support their families and pay for school fees as the virus has led to lower incomes.

“Our mother bought these for us when gold was a lot cheaper," she said, pointing to the solid gold bracelets on her wrist. “We need to have some cash at home since these are unpredictable times."

Write to Eric Bellman at and Vibhuti Agarwal at

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Edit Profile
My ReadsRedeem a Gift CardLogout