Gold jewellery demand softened slightly in 2022, almost managing a return to pre-COVID levels of demand, which in 2019 stood at 2,127t. This was achieved during a year that saw periods of strong rises in the gold price (reaching record levels in some local markets, like India and Turkey) and at a time when China was hobbled by lockdowns and a COVID outbreak. Demand continues to face challenges in 2023, as global economic growth slows and sharply rising inflation spells a cost of living crisis in many markets.
Jewellery
31 January, 2023
Weakened by COVID disruptions, China weighed on global jewellery demand in 2022
- Total annual jewellery demand saw a modest decline, 3% lower at 2,086t
- Steep declines in Chinese demand throughout the year had an outsized impact on the world total
- Global Q4 demand was down 13% y-o-y, a fall that was partly explained by the very high base of Q4’21 demand
| Tonnes | 2021 | 2022 | YoY % change | |
|---|---|---|---|---|
| World total | 2,147.7 | 2,086.2 |  |
-3 |
| India | 610.9 | 600.4 | |
-2 |
| China, P.R.:Mainland | 673.3 | 570.9 | |
-15 |
Source: Metals Focus, World Gold Council
China
China’s gold jewellery demand in 2022 fell 15% to 571t, 113t below its 10-year annual average. Annual demand was affected throughout much of the year by recurrent lockdowns across major cities as the authorities implemented a zero-COVID policy; then by a spike in infections as the policy was abruptly reversed in December. The 10% rise in the local gold price during the year also weighed on gold jewellery consumption.
Q4 demand saw a 28% y-o-y decline to 127t – the weakest Q4 since 2009.China’s economy was hammered by these COVID-related disruptions, which resulted in the country’s lowest Q4 income growth since 2003.
Notwithstanding the relative weakness of demand in China, interesting consumer trends were noted. Investment motives were a prominent driver of gold jewellery purchases as the need for value preservation intensified given COVID-related uncertainties and a weak RMB. As a result, quasi-investment 24k gold jewellery products with high pricing transparency and low labour charges gained in popularity.
Meanwhile, premium products including Heritage Gold jewellery continued to expand their market share. While the creative designs of these products attracted consumer attention, their lucrative margins also motivated the sales efforts of jewellery retailers.
Looking to the year ahead, we expect China’s gold jewellery demand to gradually pick up. Bloomberg’s median forecast sees China’s 2023 GDP growth significantly higher at 4.8%, 1 which should spell an improvement in gold jewellery demand. Our conversations with industry contacts suggest that jewellery manufacturers were busy on the approach to the 2022 Chinese New Year (CNY) holiday. But there are reasons for caution in our Outlook. And news that the Chinese population shrank by 850,000 last year could represent a longer-term challenge for the industry. 2
India
A 2% decline in 2022 gold jewellery demand in India belies a strong absolute annual total. At 600t, demand was in line with the annual average over the 10-year period preceding COVID, despite high/rising local gold prices being a key headwind at times during the year. Q4 demand fell 17% y-o-y, but this apparent large decline is set against Q4’21’s record high level; quarterly demand of 220t was the fourth-highest quarter in our series back to 2000.
Q4 demand was exceptionally strong during the festive period in the first half of the quarter. Discussions with the trade revealed that sales during this period were around 20% higher y-o-y, indicative of very strong sentiment, particularly when we consider that last year’s festival demand was robust. Jewellery demand also received a boost from wedding purchases during the quarter.
However, momentum was derailed as gold prices surged in November and December. Our contacts suggested that demand came to a virtual standstill after mid-December, with customers preferring gold-for-gold exchange; anecdotal evidence suggests such exchange volumes almost doubled during the quarter. And higher prices encouraged higher recycling volumes.
The outlook for the first quarter in India is mixed. A higher number of auspicious wedding days in Q1 2023 (28 in Q1 this year vs 11 in Q1 2022) should be positive for demand, as should higher market prices of primary Kharif crops. Demand will, however, continue to face headwinds from the higher domestic gold price and persistently high rural inflation.
Middle East and Turkey
Regional jewellery demand in the Middle East was 15% higher in 2022 at 190t. Sizable gains in the UAE and Saudi Arabia were key contributors to the regional performance. But momentum slowed in the fourth quarter, largely in response to the high and rising gold price.
Annual jewellery demand in Turkey climbed 8%, recovering to pre-pandemic levels at 37t. Q4 demand jumped 32% y-o-y to 10t, adding to the strong Q3 total and generating the highest H2 total since 2017. Despite the rise in the local gold price during Q4, soaring consumer inflation brought the investment motive to the fore. This is reflected in the strength of plain gold jewellery pieces, while diamond jewellery demand remained weak.
US and Europe
US jewellery demand in 2022 was healthy at 144t, despite a 4% decline. Much of the y-o-y drop came through in the second half, and was partly due to the continued effect of the removal of government support packages and the shift in consumer spending away from luxury goods towards services. The growing threat of domestic recession was also increasingly evident in Q4, reflected in the 5% y-o-y decline to 51t.
However, demand in 2022 still held above pre-pandemic levels and y-o-y comparisons are against the very strong volumes of 2021. The solid US jobs market was a supportive factor, while Christmas gifting helped lift Q4 demand.
European jewellery consumption gained 4% to 71t in 2022, almost recovering to pre-pandemic levels. Q4 demand slipped 5% y-o-y to 31t, bringing to an end the preceding six quarters of growth. However, much of the decline was due to steep losses in the UK, where the underperforming economy exacerbated the impact of the cost of living crisis.
ASEAN markets
Jewellery demand in 2022 increased in almost all South East Asian markets.
Vietnam led the way with a 51% increase, taking annual demand to a four-year high of 18t. Several factors had an impact, including a slight drop in local gold prices in Q4; rising income levels as salary cuts were restored; and strengthening consumer confidence on the back of robust GDP growth.
In Thailand, y-o-y jewellery consumption increased by 17% to more than 9t. Annual demand remained relatively muted in comparison with pre-COVID levels, although quarterly demand compared more positively. Q4 posted an eighth consecutive y-o-y rise to almost 3t (+15%) – the highest total since Q4 2019. Overall, demand has continued to benefit from the reopening of the economy and the recovery in tourism. Furthermore, the drop in local gold prices in September and October encouraged gold jewellery retailers to replenish stocks ahead of the bridal season and year-end festivities.
Indonesia, South East Asia’s largest jewellery market, saw a modest y-o-y growth in jewellery demand of 5%, taking 2022 demand to 28t. Although consumer sentiment has improved, rising inflation dented consumer spending somewhat.
Rest of Asia
Annual jewellery consumption in Japan slipped fractionally was virtually unchanged at 15t in 2022. Q4 demand was down 15% y-o-y to 4t from Q4’21’s robust 5t. Rising local gold prices and a return to inflation will likely have dented consumer sentiment. Although demand in Japan has recovered from the very weak COVID-hit 2020, it has yet to regain the 16-17t annual range that was typical before the pandemic.
In South Korea, annual gold jewellery demand was down 18%, taking 2022 jewellery consumption to 15t. Consumption was affected by the worse-than-expected economic slowdown. Jewellery demand lost momentum as consumers cut back on luxuries in an environment of deteriorating household incomes and elevated debt.
Australia
The 30% growth in Australia’s annual jewellery demand was partly due to base effects: demand in 2021 was very weak thanks to strict COVID restrictions at that time. Nonetheless, annual demand was healthy at 11t, aided by a 22% y-o-y rise in Q4 demand to more than 3t.
