Jewellery
30 October, 2024
- Jewellery consumption fell to 459t in Q3 as the gold price reached a series of successive new highs, imposing affordability constraints on consumers
- India was a notable outlier as the sharp cut in gold import duties offset much of the price rise and consumers seized the opportunity to buy at lower prices
- Y-t-d global jewellery consumption is 11% lower at 1,328t.
| Tonnes | Q3'23 | Q3'24 | Year-on-year % change |
|
| World total | 520.0 | 458.6 | -12 |
|
| India | 155.7 | 171.6 | 10 |
|
| China, P.R.: Mainland | 154.1 | 102.5 | -33 |
|
The gold price extended its exceptional run in Q3, imposing affordability constraints on consumers, who bought lower volumes of fine gold jewellery. Excluding the anomalous Q3’20, when demand was decimated by the pandemic, jewellery consumption was the lowest for a third quarter in our data series back to 2000.
However, demand saw a 17% q/q improvement from the very weak second quarter, much of which was due to India’s positive reaction to the cut in gold import duties.
But this picture disguises a healthy increase in the US dollar value of gold jewellery consumption, as weaker demand was more than offset by the rocketing gold price. The average Q3 price of US$2,474/oz was 28% higher than that of Q3’23; consequently, the value of demand jumped 13% y/y to more than US$36bn. It is worth bearing in mind that such increases in demand value were widespread at the country level, with the exception of a few relatively weak markets – the most significant of which was China.
China
China saw its weakest Q3 since 2010, with gold jewellery demand 36% below the 10-year average. Similar to last quarter, the weakness can be attributed to continued strength in the local gold price, low consumer confidence and slower economic growth. In contrast to weak y/y comparisons, demand saw a seasonal quarterly rebound, supported by Chinese Valentine’s Day, the Mid-Autumn Festival and the National Day Holiday.1
Consumers increasingly favoured lighter-weight pieces across all categories in the high gold price environment. And gold jewellery retailers continue to experiment with innovative, higher-margin products combining gold with various materials including enamel, diamonds, pearls and feathers. Such pieces typically use less gold than pure gold jewellery and are therefore more affordable, while the splash of colour and dazzling designs appeal to younger consumers.
Retail brands continue to struggle in this environment, reducing inventories and closing stores, although the pace of store closures has slowed from last quarter.
Looking ahead, we expect seasonal support in Q4 ahead of Chinese New Year and some positive impact on consumption from the recent aggressive economic stimulus. But prospects are undoubtedly subdued and continued industry consolidation may reduce wholesale demand.
Table 2: Jewellery demand in selected countries, tonnes
| Q3'23 | Q4'23 | Q1'24 | Q2'24 | Q3'24 | Quarter-on-quarter % change |
Year-on-year % change |
|
| India | 155.7 | 199.6 | 95.5 | 106.5 | 171.6 | 61 | 10 |
| Pakistan | 5.7 | 5.1 | 4.6 | 4.3 | 4.0 | -7 | -30 |
| Sri Lanka | 2.3 | 2.6 | 1.7 | 1.7 | 1.1 | -37 | -52 |
| Greater China | 164.3 | 160.9 | 195.4 | 92.1 | 109.6 | 19 | -33 |
| China, P.R.: Mainland | 154.1 | 148.4 | 184.3 | 86.2 | 102.5 | 19 | -33 |
| Hong Kong SAR | 9.3 | 11.3 | 9.8 | 4.9 | 6.2 | 27 | -33 |
| Taiwan Province of China | 1.0 | 1.2 | 1.3 | 1.0 | 0.9 | -12 | -6 |
| Japan | 4.7 | 4.7 | 3.2 | 3.7 | 4.0 | 9 | -15 |
| Indonesia | 5.9 | 8.3 | 5.5 | 4.3 | 5.4 | 25 | -9 |
| Malaysia | 2.6 | 3.1 | 3.9 | 2.7 | 2.3 | -14 | -12 |
| Singapore | 1.6 | 2.0 | 2.1 | 1.6 | 1.5 | -9 | -8 |
| Korea, Republic of | 2.8 | 3.1 | 3.5 | 2.8 | 2.7 | -5 | -4 |
| Thailand | 2.5 | 3.0 | 1.9 | 1.9 | 2.4 | 24 | -5 |
| Vietnam | 3.0 | 3.8 | 4.1 | 3.1 | 2.6 | -15 | -13 |
| Australia | 2.4 | 3.3 | 1.4 | 2.5 | 2.0 | -23 | -19 |
| Middle East | 42.3 | 41.0 | 42.8 | 39.2 | 32.7 | -16 | -23 |
| Saudi Arabia | 10.2 | 8.7 | 8.5 | 8.4 | 8.3 | -1 | -18 |
| UAE | 9.2 | 10.3 | 9.6 | 9.2 | 7.1 | -23 | -23 |
| Kuwait | 3.4 | 3.8 | 3.1 | 3.1 | 2.4 | -22 | -28 |
| Egypt | 6.3 | 6.0 | 8.0 | 6.8 | 5.1 | -25 | -19 |
| Islamic Republic of Iran | 7.4 | 6.1 | 7.2 | 6.2 | 5.6 | -10 | -25 |
| Other Middle East | 5.9 | 6.1 | 6.5 | 5.4 | 4.3 | -21 | -27 |
| Turkey | 11.4 | 10.9 | 11.3 | 8.3 | 9.4 | 14 | -17 |
| Russian Federation | 11.1 | 12.1 | 8.3 | 8.9 | 11.7 | 32 | 5 |
| Americas | 37.8 | 63.7 | 33.1 | 43.2 | 37.2 | -14 | -2 |
| United States | 28.6 | 49.1 | 24.5 | 32.6 | 27.9 | -14 | -2 |
| Canada | 2.5 | 5.8 | 2.7 | 3.3 | 2.4 | -26 | -3 |
| Mexico | 3.3 | 3.8 | 3.0 | 3.4 | 3.4 | -0 | 2 |
| Brazil | 3.5 | 5.0 | 3.0 | 4.0 | 3.5 | -11 | 2 |
| Europe ex CIS | 13.0 | 30.2 | 11.0 | 14.9 | 12.6 | -15 | -3 |
| France | 2.0 | 6.0 | 3.2 | 2.9 | 1.9 | -34 | -5 |
| Germany | 2.1 | 4.8 | 1.0 | 2.5 | 2.0 | -19 | -6 |
| Italy | 3.0 | 9.4 | 2.4 | 3.7 | 2.9 | -21 | -3 |
| Spain | 1.9 | 2.5 | 1.8 | 2.1 | 2.0 | -6 | 3 |
| United Kingdom | 4.0 | 7.5 | 2.6 | 3.8 | 3.9 | 1 | -5 |
| Switzerland | - | - | - | - | - | - | - |
| Austria | - | - | - | - | - | - | - |
| Other Europe | - | - | - | - | - | - | - |
| Total above | 469.2 | 557.3 | 429.5 | 341.7 | 412.7 | 21 | -12 |
| Other & stock change | 50.8 | 66.1 | 49.3 | 49.2 | 46.0 | -7 | -10 |
| World total | 520.0 | 623.4 | 478.8 | 390.9 | 458.6 | 17 | -12 |
Source: Metals Focus, Refinitiv GFMS, ICE Benchmark Administration, World Gold Council
India
The cut in India’s gold import duties in July sparked a revival in gold jewellery demand, which posted its strongest third quarter since 2015. Momentum in consumer demand picked up sharply in late July and remained strong until the mid-September arrival of the inauspicious Shradh period.2
The duty cut negated much of the rise in gold prices during August, which encouraged some early purchases for weddings scheduled over the next couple of quarters, as well as drawing out pent-up demand from previous quarters. Good monsoons also acted as a tailwind for robust growth in lower tier cities and rural areas.
Plain and studded pieces of gold jewellery all performed well, with some consumers taking advantage of the price drop to buy heavier pieces. Nevertheless, the 14K segment saw healthy growth as such low-cost items appeal to younger consumers.
Flows of smuggled gold into India all but disappeared thanks to the duty cut and discounts narrowed during the quarter as trade imports jumped to benefit from lower domestic prices.
As Q4 progresses with the arrival of the Dhanteras and Diwali festive periods, demand should remain supported, with buying likely to emerge on any corrective dips in the price.
US and Europe
A tenth consecutive y/y decline in gold jewellery in the US took y-t-d demand to its lowest since 2020. Nevertheless, the decline in volume disguises a 25% y/y uplift in the value of Q3 gold jewellery demand.
The impending Presidential election may be weighing on consumption at the margin, along with lingering talk of recession as consumers continue to feel the pinch from higher costs of living. Lean inventory levels bode well for restocking ahead of the seasonally strong fourth quarter holiday season.
Q3 gold jewellery demand in Europe was also impacted by the higher price, although historical comparison shows it smack in line with average Q3 levels in the few years preceding the pandemic. Nevertheless, weak consumer sentiment and a gloomy economic backdrop (notably in Germany) undermined demand, with some shift to platinum noted as its price differential with gold continued to widen.
Middle East and Turkey
Gold jewellery consumption in Turkey saw its second consecutive y/y decline, driven by the higher local gold price. Nevertheless, Q3 demand remained strong in absolute terms – slightly above its 10-year quarterly average.
The higher gold price was the main reason for double digit y/y declines across the Middle East region, while India’s gold duty cut also reduced demand from Indian tourists, by making it more affordable for them to buy gold domestically. The 15% VAT levied on jewellery in Saudi Arabia magnified the impact of the price rise.
Alongside the higher gold price, a shift in discretionary spending towards other consumer goods was seemingly a further contributor to weaker jewellery demand in Iran.
A surprise jump in inflation in Egypt, along with fears of wider regional conflict, undermined consumer sentiment and, in turn, gold jewellery demand, which reached its lowest levels since Q2’20.
ASEAN markets
The record gold price environment resulted in weaker gold jewellery demand among our covered ASEAN markets. Currency depreciation in Vietnam exacerbated the rise in international gold prices, helping to explain the larger y/y decline in demand in that market.
Despite a strengthening currency offsetting much of the Q3 rise in the gold price, demand in Malaysia saw a notable y/y decline as consumers maintained a cautious mindset. Consumers in Indonesia responded to the high gold price with a continued shift towards lower carat items to compensate for higher prices.
Demand in Thailand was relatively resilient, partly due to the announcement that a long-awaited US$13bn (450bn baht) ‘digital wallet’ handout aimed at boosting the economy, would also include cash payments. The government began rolling out the programme at the end of the quarter, which may help support demand in Q4.3
Rest of Asia
Japanese gold jewellery consumers were deterred by the gold price rally and demand weakened from the relatively strong third quarter levels of the past two years. Demand was more on a par with average Q3 demand prior to the pandemic.
Gold jewellery volumes continue their long-term decline in South Korea. The pace of decline slowed, although that was partly due to the comparison with a fairly low base from Q3’23.
Australia
Gold jewellery demand in Australia posted an outsized y/y decline as consumers remained under pressure from a combination of high inflation and interest rates.4
