31 January, 2019

Full-year jewellery demand steady at 2,200t, but ended with a soft Q4

  • The recovery in China stalled in Q4, as slowing economic growth and trade frictions dented consumer sentiment
  • Demand in the Middle East remained weak, but Iran was the laggard due to the ongoing impact of economic sanctions 
  • A second year of growth in the US pushed jewellery demand there to its highest since 2009, although the pace slowed in Q4
Tonnes 2017 2018 YoY
World total 2,200.9 2,200.0 0%
India 601.9 598.0 -1%
China 651.2 672.5 3%

Annual jewellery demand barely changed at 2,200t, after a 3% y-o-y drop in Q4 demand (to 636.2t) reversed the Q3 gains. China was the main engine of growth in 2018, despite witnessing a slowdown in Q4 as the trade war with the US and slowing economic growth rate weighed on demand. Economic hardship, relatively weak currencies and the after effects of tax-changes affected Turkey and Middle Eastern markets to varying degrees: Iran and Turkey were hit particularly hard.


2018 jewellery demand steady: China & US growth offset weaker Middle East

2018 jewellery demand steady: China & US growth offset weaker in Middle East

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer



Annual Indian gold jewellery demand weakened marginally to 598t, from 601.9t in 2017. Q4 demand was also fractionally lower y-o-y (180.1t v. 182.4t), as consumers showed caution in the face of high and volatile local gold prices. Demand was constrained in 2018 as there were relatively few auspicious wedding days in the Hindu calendar.This had a particularly pronounced effect on Q4 demand, given that November and December are traditionally peak wedding season months. The outlook is more positive for 2019, as there is a marked increase in the number of such auspicious days.

Buoyant inventory levels meant a good portion of retail demand in Q4 was met by de-stocking. Strong imports in Q3 led to a build-up of stock among manufacturers and wholesalers, which was drawn down during Q4 to meet demand – reflected in a 23% y-o-y drop in fourth quarter official gold imports.

There was also a rise in the volume of gold-for-gold exchange. At a time of higher and more volatile local gold prices, the market saw a rise in the number of consumers preferring to exchange existing gold for new pieces. This was particularly prevalent in the south and west regions, where some retailers reported an increase of up to 45% in exchange activity.1 The market was therefore well supplied with gold, and this was reflected in local price discounts.

The local gold price was at a discount to the international prices of around US$2/oz on average during Q4. The domestic gold price was broadly at a discount during the quarter (aside from a small window in late November when a dip in prices sparked a bout of buying, pushing it to a small premium). The market was well supplied by existing stocks and gold-for-gold exchange at a time of constrained demand.

Organised jewellery retailers continued to gain market share. Partially as a consequence of government policy in recent years, national and regional chain stores continued to outperform single, standalone stores. Chain stores reported positive Q4 sales growth, in contrast to single stores that reported Q4 sales as being flat or marginally lower.


Annual Chinese jewellery demand grew by 3%, but recovery stalled in Q4. Full-year Chinese jewellery demand reached a three-year high of 672.5t. But Q4 demand slipped 3% to 174.8t as the local gold price spiked sharply higher in October and economic growth continued to slow. Furthermore, the ‘Golden week’ holiday in October did not provide the usual boost to jewellery demand that it has done in the past. The role of this holiday as a shopping occasion is gradually fading as consumers increasingly use it instead as an opportunity to spend on experiences, such as travel. We expect this trend to continue in 2019.

Although consumer sentiment was undermined in Q4 by China-US trade friction and a lacklustre domestic stock market, this was countered by tax cuts aimed at stimulating consumption. Certain sectors of the gold jewellery market were robust, with ultra-high purity products (9999s or 99999s)2 performing well in some regions and 3D hard gold continuing to grow.3 By contrast, the traditional 24K category lost market share, although demand for these products still dominates the market.

The retail industry continues to expand and innovate. The jewellery retail network extended further throughout 2018, with leading branded retailers leading the charge. Already well-established in Tier 1 and 2 cities, these retailers are increasingly penetrating into Tier 3 and 4 cities. At the same time, they continue to focus on product innovation. One of the newest products brought to market is “Mirror Gold”: a 999s product, with a shiny, smooth mirror-like surface, targeted at a younger generation, who prefer simpler fashionable designs.

Middle East & Turkey

A sharp drop in Turkish Q4 jewellery demand set the seal on a record yearly low. Demand sank 21% to just 9.1t in Q4 as rising unemployment and double digit inflation rates continued to pummel disposable incomes. The lira strengthened against the dollar from the extreme lows reached in August. This was reflected by a downward move in local gold prices, which helps explain a sharp drop in recycling activity during the quarter. 


Turkish annual jewellery demand sank to new low in 2018

Turkish annual jewellery demand sank to new low in 2018

Sources: Metals Focus, Refinitiv GFMS, World Gold Council; Disclaimer


Amid widespread weakness in the Middle East, Iran lagged the pack. A 32% y-o-y drop in Q4 demand in Iran almost matched the 35% fall in the annual figure. For 2018, the market hit a new record low of 29.5t as continued sanctions ravaged demand. Demand was focused exclusively on wedding sets and engagement rings. Other ‘unnecessary’ spending on jewellery was halted. 

Intervention by the Iranian central bank to support the rial led to a sharp appreciation of the currency, which in turn led to lower local gold prices. But this did not feed through to an improvement in sentiment among consumers, hence the very weak quarter for the jewellery sector.

Jewellery demand was very weak in both Q4 and 2018 for the UAE and Saudi Arabia alike. Both markets were affected by the introduction of 5% VAT in Q1 2018. Purchasing activity ahead of the tax change boosted Q4 2017 demand, making Q4 2018 demand all the weaker in comparison.

The West

Another year of modest growth in the US took jewellery demand to a nine-year high of 128.4t (up 4% y-o-y). Q4 saw an eighth consecutive quarter of y-o-y growth and demand of 48.1t was the highest since Q4 2009. Gains were widespread across the spectrum, from lower-carat, mass-market jewellery to high-end branded items.

But the pace of growth decelerated slightly in Q4 as concern over the path of US economic growth combined with a sharp correction in US equity markets to dampen consumer confidence. And prospects for Q1 2019 are less buoyant as the ongoing government shutdown impacts sentiment and the wealth effect of the stock market correction filters through to consumers. 

European jewellery demand was fractionally lower on an annual basis, down 1% to 73.4t. Q4 demand slipped 2% to 33.5t – the lowest Q4 in our data series – as consumers became more cautious. The UK saw the biggest Q4 decline, with demand overshadowed by ongoing Brexit chaos. Italy and France, each beset by political turmoil, were similarly weak. Germany and Spain were more robust: both markets saw modest gains in Q4 and full-year 2018, although growth in these small markets was insufficient to offset weakness elsewhere in the region.

Other Asia

The smaller Asian markets were again mixed: growth in Indonesia, Vietnam and Thailand outweighed the combined y-o-y declines across the rest of the region. Despite stock market volatility, healthy economic growth in these three markets fuelled demand for gold jewellery. 

Japanese jewellery demand slowed in the second half of the year: Q4 saw a 2% y-o-y drop to 5.1t. Consequently, full-year demand inched down to a three-year low of 16.5t. After a difficult year, beset by natural disasters and extreme weather conditions, consumer sentiment was subdued. Lacklustre demand for the popular Kihei gold chains was partly due to a rising local gold price.


  1. This gold-for-gold exchange activity has no impact on net demand, as it is a process of exchanging old gold for new, but can tend to increase at times of slower demand and higher prices

  2. 9999s and 99999s relates to gold of 99.99% purity or 99.999% purity, which compares with traditional 24K gold of 99.9% purity.

  3. For more detail on 3D hard gold and a detailed look at recent trends in China’s gold jewellery market, see

Important disclaimers and disclosures [+]Important disclaimers and disclosures [-]