Global gold jewellery demand for Q1 came in at 478t, almost exactly in line with that of Q1’22. This was 5% lower than the five-year quarterly average of 501t. China was the clear outperformer during the quarter, where consumers embarked on a relief-driven shopping spree. India saw a very different quarter, with demand quashed by record local gold prices. Elsewhere the higher gold price generally kept a lid on jewellery buying, although some markets saw a jump in investment-motivated demand.
Jewellery
5 May, 2023
Global jewellery demand totalled 478t – unchanged y/y as growth in China met with price-driven weakness in India.
- Total jewellery consumption held steady against Q1’22, but was 24% lower q/q due to seasonal effects
- China saw vigorous buying: demand was 11% higher y/y at 198t as the removal of zero-COVID restrictions sparked consumers into life
- High and volatile gold prices proved challenging for jewellery consumers in several markets, most notably India, which saw the weakest Q1 since 2020.
| Tonnes | Q1'22 | Q1'23 | YoY % change | |
|---|---|---|---|---|
| World total | 475.3 | 477.9 |  |
1 |
| India | 94.2 | 78.0 |  |
-17 |
| China, P.R.:Mainland | 177.4 | 197.7 | |
11 |
Source: Metals Focus, World Gold Council
China
Chinese consumers bought 198t of gold jewellery in Q1, 41% of the global total. This was the highest first quarter for Chinese jewellery demand since 2015 as Chinese consumers used their wallets to celebrate finally being unleashed from restrictive zero-COVID measures. The recovering domestic economy further ignited demand: Q1 GDP increased 4.5% y/y and household income grew 4% in real terms.1
Pent-up demand from previous quarters also helped. Wedding gold jewellery demand improved amid the relaxation of COVID-related restrictions; the wedding industry has reportedly been operating at full capacity so far in 2023.
And gold jewellery buying was likely spurred by investment motives. The tendency to save among Chinese consumers remains at historically high levels, and gold’s financial value attracted consumer attention. Jewellery (mainly gold) was the second strongest category for y/y sales growth in Q1, as reported by the National Bureau of Statistics.2
Hard pure gold jewellery products soared in popularity in Q1. The hardness of these lightweight products enables stylish designs, which are key to their rising popularity, along with their affordability. Enhanced pricing transparency also helped reassure consumers who remain cautious about spending; retailers are increasingly adopting the per-gram pricing method for these products instead of the per-piece model which may have masked the true mark-ups charged to consumers.
Heritage gold jewellery continued to enjoy a vital share of the market. Culture-rich designs, along with the investment motives of jewellery consumers sustained demand for these chunky products. On the other hand, 18K and 22K products continued to lose market share to hard pure gold products. Within both the Heritage gold and the hard pure gold jewellery ranges, products with enamel and gem inlays increased in popularity.
Looking ahead, we expect to see the usual seasonal dip in Q2 jewellery demand in China. And should very elevated local gold prices persist, they could hinder gold jewellery demand. An additional threat comes from the potential for consumers to allocate more of their budgets to travel and entertainment, similar to the post-COVID trend that has been experienced in Western markets.
On the other hand, the combination of continued domestic economic recovery and pent-up wedding jewellery demand is likely to provide further support. We believe that hard pure gold products will benefit more than other product lines in Q2, thanks to their affordability, seasonal suitability and innovative designs.
India
Gold jewellery demand of 78t was the weakest for a first quarter in India since 2020. Demand was 17% lower compared with Q1’22. And, coming on the heels of an exceptionally strong Q4, the Q1 figure generated a stark 65% q/q decline.
In context of the record high local gold price, it was unsurprising to see such lacklustre jewellery demand. Indian consumers are keenly aware of – and sensitive to – moves in the local gold price. We had already reported that demand in Q4 slowed sharply as the price rocketed in December, and this trend continued into January as local prices reached fresh highs. The price pullback in February generated a short-lived recovery, thanks to some bargain-hunting.
The price has also encouraged a rise in smuggling activity, incentivised by an avoidance of import duties. This has reportedly encouraged demand in smaller cities, and among independent retailers, where cash purchases are more commonplace.
18k jewellery continued to gain popularity during the quarter, particularly among younger, more budget-conscious consumers. Studded jewellery continues to slowly gain market share; the higher margins on these products allow retailers to incentivise purchases through promotions. At the trade level, large retailers performed relatively well during the quarter, thanks to their ability to implement aggressive marketing campaigns.
The outlook is for demand to remain muted over the coming quarter. Risks remain to the downside until we see evidence of healthy monsoon rainfall. Rural demand – a key source of gold jewellery demand – remains fragile and persistent inflation will likely continue to impact consumer sentiment. The historically high gold prices creates a further obstacle to demand, although there are early signs that consumers have started to adjust: early estimates suggest that buying during the highly auspicious Akshaya Tritaya festival was only modestly weaker compared with last year’s exceptionally strong levels.3
Middle East and Turkey
Q1 jewellery demand in Turkey was 20% higher y/y at 9t. But the q/q comparison showed a 10% drop as demand was affected by the devastating earthquakes that hit the country in February. Investment motives continued to fuel jewellery demand during Q1, with high-purity 22k sales performing much better than 14k.
Jewellery demand was mixed across the Middle Eastern region in Q1; higher prices dampened demand in some markets but encouraged quasi-investment buying in others. Iran (-15%) and the UAE (-22%) both saw weaker y/y demand, with gold price rises in the former magnified by local currency depreciation against the dollar. Currency weakness was less of a deterrent in Egypt: demand here increased 6% y/y as gold jewellery benefited from safe-haven demand.
US and Europe
Q1 gold jewellery demand in the US slipped 4% y/y to 26t. Demand was healthy in comparison with longer-term levels: first quarter demand for the previous five years averaged 25t.
Rising concerns around likely recession dampened consumer sentiment, supported by the fact that the lower-end was the weakest part of the market. Nevertheless, despite an increasingly challenging economic climate, demand is supported by continued strength in the jobs market and by the number of weddings remaining elevated due to the post-COVID backlog.
Jewellery demand in Europe was 11t, unchanged from Q1’22. Although this was below pre-COVID levels, the performance was robust in light of the higher euro gold price. Improved tourism reportedly supported modest growth in France and Italy.
ASEAN markets
On the face of it an 18% y/y decline in Vietnamese gold jewellery demand suggests a weak quarter. But this was partly due to strong base effects – Q1’22 was the strongest first quarter since 2007. And Q1 demand of 5t was comfortably higher than average quarterly levels for the five years preceding the pandemic.
That said, demand would have been stronger had there not been a sharp slowdown in economic growth during Q1. Buying was healthy during the Lunar New Year celebrations, before tailing off in February and March as the gold price rose.
Rising gold prices and cost of living pressures were behind a 6% y/y decline in Thailand’s Q1 jewellery demand. In fact, the surging gold price encouraged consumers to sell back existing holdings of old gold jewellery. Demand in rural communities was reportedly more sluggish than in urban areas, due to a lagged economic recovery in those regions.
Indonesia bucked the regional trend with a 12% y/y rise in Q1 demand to 6t. A relatively robust domestic economy boosted consumer sentiment, which underpinned demand. Nevertheless, the market remains far smaller than it was before the -pandemic and the rising price will likely limit demand going forward.
Rest of Asia
Gold jewellery demand in South Korea was a relatively paltry 3t in Q1, the second-weakest quarter for more than 10 years and 23% lower y/y. High gold prices, at a time when rising living costs and interest rates are squeezing disposable incomes, weighed on demand.
In contrast, demand in Japan was fractionally higher y/y at 3t. Demand was more robust than expected, particularly given the rising gold price. Decent demand for ‘kihei’ chains (plain, heavy gold chains) suggests that demand was supported by quasi-investment.
Australia
Jewellery demand was bang in line with year-earlier levels at a little over 2t. In value terms, jewellery consumers spent AU$210mn (US$143mn) on gold jewellery, a 7% increase on the AU$196mn (US$142mn) of Q1’22.4
