Domestic demand, on its part, is expected to shrink in volume terms due to soaring prices, store closures during the lockdown, and limited discretionary spends since. Domestic volumes declined about 70 per cent in the first quarter.
Domestic gold prices are expected to rise 30-35 per cent YoY in FY21, mimicking global prices, due to heightened geopolitical uncertainties, recessionary fears, US Fed rate cuts, and rupee depreciation. This is expected to curb offtake.
In value terms, however, demand is expected to be hit to a lower extent due to higher prices. With gold prices projected to rise this fiscal year, people are expected to invest more in bars and coins.
clusters such as Thrissur and Coimbatore, which mainly manufacture plain gold and traditional jewellery, and cater largely to the domestic market, are likely to be hit.
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