Gold jewellery demand of 474t in the first quarter of this year was relatively soft, particularly when compared with the bumper previous quarter, but much of the decline can be accounted for by China and India, which together tend to generate between 55-60% of total quarterly jewellery consumption, the World Gold Council (WGC) said in its latest quarterly trend report.
Demand elsewhere was relatively robust, particularly in the Middle East and Europe; excluding China and India, jewellery demand was 7% higher year-on-year, the report said
According to the report, jewellery fabrication was slightly more resilient, declining by 4% y-o-y to 518t. As a result the market saw a build-up of inventories during the quarter (+46t), as consumer demand failed to match expectations, the report added.
Although jewellery demand continued to hold above the weak levels seen during the worst of the pandemic in 2020, it has yet to recover to the sort of pre-COVID volumes that were the norm in most markets.
A comparison with 2019 levels reveals that, with a few exceptions, demand in the most recent quarter is weaker than that of Q1’19 – most notably in India and the smaller markets in Asia. The market has yet to ‘normalise’ following the shock of the pandemic, and the subsequent rise in gold prices may slow its recovery, the WGC said.
The China market
After a promising start to the year, Chinese gold jewellery demand in the first quarter fell 8% to 178t. All things considered, the first quarter was in fact relatively robust, holding comfortably above the Q1 five-year average of 154t and only 6t below its average for the last ten years. But the y-o-y decline was unavoidable in the context of:
- high and volatile gold prices
- the comparison with a very strong base period in Q1 2021
- the introduction of lockdown measures to combat a fresh outbreak of COVID-19.
January and February saw upbeat sales for gold jewellery in China, lifted by festival sales ahead of the New Year Holiday; volumes were also boosted by the continued efforts of retailers to promote heavier gold products.
But the sharp rise in the gold price in late February following the outbreak of war in Ukraine impacted demand. As strict lockdowns were imposed in March across key cities such as Shanghai and Shenzhen, demand all but halted.