30 January, 2020

The steep rise in the gold price in the second half of the year cut global jewellery demand: annual volumes fell 6% to 2,107t

  • Fourth quarter jewellery demand sank to its lowest since 2011 – down 10% y-o-y to 584.5t
  • Weakness in India and China explained much of the drop in global volumes
  • By contrast, the value of gold jewellery demand increased: the annual US dollar value was its highest for five years at US$94.3bn (+3%), with Q4 growing 9% to US$27.8bn.
Tonnes 2018 2019   YoY
World total 2,240.2 2,107.0 -6%
India 598.0 544.6 -9%
China, P.R.:Mainland 686.3 637.3 -7%

In 2019, global gold jewellery demand volumes fell 6% to 2,107t. Purely an H2 phenomenon, the weakness was primarily due to the big Q3 jump in the gold price, which impacted affordability. The price was well supported at elevated levels throughout the closing months of 2019, leading to a 10% y-o-y drop in Q4 demand to 584.5t. 

The value of gold demand tells a different story. The amount that consumers spent on gold increased in 2019. In US dollar terms, gold jewellery demand grew by 3% to a five-year high of US$94.3bn. And much of this came from a 9% y-o-y increase in Q4 demand, which reached US$27.8bn - a seven-year high. 


A 17% y-o-y drop in Q4 generated a 24% decline for H2 in India. Key factors behind the second half weakness were: higher gold prices (having reached record levels in Q3), domestic economic slowdown and muted rural demand. Weddings and retailer promotions checked the downfall to some extent. 

Dhanteras – the first day of Diwali (the Festival of Light) which fell on 25 October – failed to bring cheer to gold demand in Q4 as the higher domestic gold price and weak economic sentiment curtailed gold sales. Festival demand received some support from advance wedding purchases and a dip in the gold price ahead of the November wedding season released some pent-up wedding-related demand, but volumes were nevertheless soft compared with 2018.  

The slowdown was less pronounced among the more organised national and regional chain stores. Branded chain stores continue to outperform other areas of the gold jewellery market, reporting far more modest declines in sales than medium-sized and standalone stores. Chain stores were better positioned to offer attractive promotions during Dhanteras and some launched new collections for Diwali and the wedding season, supporting their sales volume despite the higher gold price.  

Similarly, demand for higher-value items was more resilient. As the economy has slowed, middle-class urban and rural consumers have become more cautious in opening their wallets. And with gold prices holding near record-high levels, this impacted demand for lightweight gold jewellery in Q4. But the volume of high-ticket purchases (heavyweight weddings items such as necklaces and waist chains/bands) held up relatively well. This reflected the broader resilience in higher-end sectors, which succumbed less easily to the challenging environment. Anecdotal reports suggest that diamond jewellery performed better in the quarter, and luxury car maker Mercedes Benz India  y-o-y sales growth in Q4.

India’s gold market continues to strive towards regulation and standardisation. The opening weeks of 2020 saw two important developments in the gold market: notification on mandatory hallmarking for gold jewellery and the introduction of Indian gold delivery standards for gold bullion. Effective from 15 January 2021, hallmarking will become mandatory for all gold jewellery sold as 14K, 18K or 22K. 

Retailers have a one-year period in which to become compliant, selling or melting any stocks of non-hallmarked jewellery and registering with Bureau of Indian Standards (BIS). 


Higher gold prices and slowing economies caused weakness in India and China

Higher gold prices and slowing economies caused weakness in India and China

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



China’s Q4 jewellery demand was 10% lower y-o-y at 159.7t. And, after shrinking for a fifth consecutive quarter, full-year 2019 demand slid 7% to 637.3t. The slowing economy, rising inflation, global trade disputes, higher gold prices and the younger generation’s shifting tastes – towards lighter jewellery pieces with fashionable designs – contributed to subdued demand in 2019. 

Consumers’ disposable budgets were limited. Growth in key economic indicators continued to decelerate throughout 2019. GDP growth slowed to 6.1% y-o-y – the lowest since 1992. Meanwhile, surging pork prices pushed y-o-y CPI growth up to a seven-year high of 4.5% in December. These twin factors hampered jewellery demand. 

Traditional mass-appeal 24k jewellery continued to lose market share to more innovative product ranges. Relatively weak performance in the traditional segment – which represents the lion’s share of China’s jewellery market – dragged total jewellery demand down. But innovative products have been gaining market share as young consumers favour lighter pieces with fashionable designs. The higher margins associated with these products (which tend to be price on a per-piece basis, rather than by weight) make it easy for them to gain traction among retailers, further accelerating the structural change in the market. 

Heritage gold had a good year in 2019. Embedded with Chinese cultural elements and ancient craftsmanship, these chunky 24K products turned out to be a success among the middle-aged generation. Moreover, by incorporating “China Fashion” and using technology to reduce product weight, jewellers are able to target younger consumers too. Chinese youngsters don’t believe gold jewellery can help them stand out and have a weak emotional connection to gold, according to our 2019 global consumer research results. However, the appearance of heritage gold with its intricate cultural designs has proven effective in attracting younger consumers.  

The traditional peak season for gold jewellery sales before Chinese New Year was as expected. The traditional belief that gold can bring good luck – combined with the fact that many companies grant year-end bonuses ahead of the lunar new year – lifted jewellery consumption ahead of the biggest festival of the year. To celebrate the Year of Rat, mouse-themed products are quite popular, particularly lightweight and affordable 3D hard gold products, which end to attract young consumers. 

Middle East and Turkey

Annual Middle Eastern jewellery demand fell 2% after a 3% y-o-y decline in Q4. Fourth quarter demand in Iran dropped by 10% y-o-y, as protests against rising fuel prices erupted throughout the country. Despite this, annual demand grew by 4% to 30.5t, although current troubles in Iran suggest demand could remain muted into 2020.

Widespread weakness in demand across the rest of the region was primarily a response to the higher gold price, particularly as consumers in these markets continued to face economic and geopolitical challenges. Egypt was the outlier: Q4 jewellery demand of 6.8t posted a healthy 13% y-o-y rise. Consumers, buoyed by improving economic indicators and continued stability in the domestic currency, generated annual demand of 26.4t (+7%). The outlook is fragile however, particularly while gold prices remain elevated and regional conflicts persist.

Turkish jewellery demand was remarkably resilient in Q4, fractionally lower at 9.1t (-1% y-o-y). This apparent relative strength was largely a reflection of the weakness in Q4 2018, when jewellery demand sank to a six-year low. Lira prices climbed towards fresh record highs in the closing weeks of the quarter, suggesting that demand could tail off during Q1 2020.


The gold price jumped in 2019, hitting record highs in some currencies

The gold price jumped in 2019, hitting record highs in some currencies

Sources: Datastream, ICE Benchmark Administration, World Gold Council; Disclaimer

Note: Index 31/12/2018 = 100


The West

US jewellery demand grew for a third successive year in 2019, up 2% to a 10-year high of 131.1t. Consumer confidence improved amid a relatively robust economic environment and Q4 saw a twelfth consecutive quarter of y-o-y growth – up 2% y-o-y to 49.2t. 

European jewellery demand was contrastingly weak: modest declines were widespread across the region. Annual 2019 demand lost 2% y-o-y to reach a low for our series of 72.1t. Political uncertainty across the region – not least the ongoing Brexit saga – a lacklustre economic backdrop and global geopolitical uncertainty took their toll on jewellery demand. 

Other Asia

Higher gold prices dented demand across the East Asian region in Q4, leading to widespread losses in full-year demand. Consumers in Indonesia and Thailand also had to contend with slowing domestic economies. In Vietnam, meanwhile, consumers have been hit by liquidity issues due to poorly performing investments in real estate and equities.

Japanese jewellery demand ran counter to the regional trend, rising by 4% y-o-y in Q4 (to 5.2t). This equated to annual growth of 3%, with full-year demand reaching a six-year high of 17t. Feedback suggests that growth was concentrated in demand for kihei chains – a quasi-investment jewellery product range of plain, heavy gold chains. 


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