Gold Demand Trends Q1 2018

2 May, 2018


Global Q1 jewellery demand was little changed at 487.7t.

  • Rising local gold prices, exaggerated by currency weakness, produced a weak quarter in India
  • This was countered by growth in China, where demand was boosted by holiday shopping 
  • The US saw the highest Q1 jewellery demand since Q1 2009
  • Investment motives underpinned Turkish demand.
Tonnes Q1'17 Q1'18 YoY
Jewellery 491.6 487.7 -1%
India 99.2 87.7 -12%
China 175.6 187.8 7%

Global gold jewellery demand was stable at 487.7t in Q1, just 3.9t below Q1 2017. A combination of relatively stable gold prices and a broadly supportive economic environment sustained demand. However, the sector remains weak when compared with longer-term historical average levels: five- and ten-year quarterly average demand was 592.1t and 556.3t respectively.


After the strongest Q4 on record Indian jewellery demand saw a sharp downturn in Q1, falling 12% y-o-y to 87.7t. This was the third weakest quarter in India’s jewellery market for ten years as a depreciating rupee magnified the rise in the international US$ gold price. Despite the fact that the gold price was relatively stable compared with year-earlier levels, there was a perception of greater volatility among jewellery consumers. Some jewellery consumers responded by holding off from buying jewellery until gold prices stabilised.

Furthermore, the number of auspicious wedding days was far fewer: there were only seven auspicious days in Q1, compared with 22 in the same period of 2017. Given the importance of wedding-related demand to India’s jewellery market, this presented a major obstacle. The softness in the market was reflected by the local gold price, which traded at a small discount to the international price for much of the quarter. 

Flows of gold into India were correspondingly light; stocks were depleted during the quarter. Official Q1 imports were down by around 50% y-o-y as retailers and fabricators reduced orders ahead of the Union Budget.1 The jewellery trade had built up healthy inventories during 2017 and, as imports shrank, these were used to meet a good portion of demand. 

Larger, national and regional chain stores reported better sales than smaller, single-store and medium retailers. This part of the market has acclimatised most quickly and easily to the introduction of GST. In Titan’s recent Q4 FY 2017-18 update, Vice-President, AR Rajaram, noted that ‘Regulatory developments like GST implementation…will pose serious challenges for the jewellery industry in India. The same situations will prove to be tail winds for organized corporate jewellers like Titan Company with strong balance sheets'.

But the wider jewellery industry continues to make progress in adapting to the new GST regime. Market research suggests that GST compliance is relatively high. And field research indicates that almost three quarters of the gold currently being sold in India is accounted for properly. 

Q2 started well, with healthy demand during the April Akshaya Tritiya festival, despite higher local prices compared with last year. And looking ahead, improving macroeconomic indicators suggest a positive outlook for jewellery demand. Moreover, the Union Budget announced measures to boost rural incomes, including higher minimum support prices and an increase agricultural credit. This bodes well for demand from the all-important rural sector, as does the forecast for a normal monsoon this year. 


Fewer auspicious days in Q1 hit India's jewellery demand

GDT Q1 2018 Jewellery - Chart: Fewer auspicious days in Q1 hit India's jewellery demand

Source: Various; World Gold Council

Data as of


Jewellery demand in China grew 7% in Q1 to 187.8t – a three-year high. Demand was buoyed by jewellery themed around the Year of the Dog, which appealed to consumers buying during the Lunar New Year holiday. The start of the week-long holiday coincided with Valentine’s Day, which further boosted demand.

18-carat K Gold and 3D hard gold jewellery continued to gain market share. In a continuation of the trend we reported throughout last year, consumers are increasingly tempted by the innovative, fashionable, non-traditional designs offered in these categories. 22-carat jewellery, which has the advantage of looking like 24-carat without being as soft, was also increasingly featured in retail showrooms. Traditional 24-carat jewellery was relatively subdued, although the premium (ultra-high purity) end of the market saw growth.

Having focused on innovation and design over the last few quarters, the jewellery trade has now started to place more emphasis on branding and customer service. Many retailers are now aiming to provide consumers with a more holistic retail solution.

The industry is optimistic, expecting a recovery in jewellery demand in 2018. The outlook is helped by the different seasonality in demand for K Gold, which is expected to see stronger sales in the traditionally quiet summer months when consumers want to wear lighter-weight, smaller pieces.

The West

Demand for gold jewellery in the US grew 2% to 23.3t – the highest Q1 since 2009. Aided by supportive economic conditions, the market continued to build on the uptrend that started in 2013, highlighting the positive effect income growth has on gold jewellery demand. Online sales again showed strong growth, a trend that is expected to continue.  

European demand inched up 1% to 12.9t. Demand in the UK – previously hit by Brexit concerns – stabilised, while consumers elsewhere seemed to be encouraged by improving economic conditions. Italy was the outlier. Demand fell 2% to 2.7t in a market unsettled by political turmoil; an indecisive March election has since given way to weeks of stalemate between the political parties. 

Other Asia

Q1 was mixed among the smaller Asian markets: Vietnam saw strong growth while South Korea underperformed. Q1 jewellery demand in Vietnam grew 12% y-o-y to 5.1t. The traditional seasonal uplift from the Vietnamese New Year (Tet) and ‘God of Wealth’ day (tenth day of the first month of the Lunar calendar) gained momentum from the wealth effect of strong economic growth. The Vietnamese General Statistics Office published data showing domestic Q1 GDP growth of 7.4%, outperforming many regional counterparts due to the country’s robust export growth.

Conversely, South Korean consumers suffered a blow to their confidence caused by higher gold prices and US-China trade tensions. Consequently, demand fell 5% y-o-y, the lowest Q1 since 2012. 

Middle East & Turkey

Turkey recorded the strongest growth of all markets in Q1: demand increased 19% y-o-y to 9.9t, despite a new record high in the local gold price. In value terms, demand increased by 34% y-o-y to TL1.6bn – above the five-year quarterly average value of TL1.4bn. Currency weakness led to another strong rise in the local gold price during the quarter, which hit highs of almost TL175/g in March. But consumers were not deterred, choosing instead to focus on gold’s wealth preservation properties. For similar reasons, recycling activity was again very subdued.

Many Middle Eastern markets saw double-digit losses, hit by tax changes, economic pressures and geopolitical concerns. Jewellery demand in Iran fell 16% to 10.7t after eight consecutive quarters of growth. The local currency plunged amid a struggling economy, political protests and fears that the US would pull out of the nuclear deal, signalling a return to sanctions. The resultant fear factor saw demand switch away from gold jewellery into coins and bars.

The introduction of a 5% VAT rate on gold jewellery in the UAE contributed to a 23% y-o-y decline.2 Q1 demand sank to 10.5t, the lowest Q1 in our data series. Consumer sentiment was further undermined by rising living costs and fears over job security. 

Only Egypt saw growth. Demand was boosted 6% to 6t, by 2017’s strong economic recovery and improved consumer sentiment due to broad currency stabilisation. However, a very low Q1 2017 somewhat exaggerates the recovery.


Jewellery demand in Turkey up strongly despite record high local price

GDT Q1 2018 Jewellery - Chart: Turkey jewellery demand grew despite new record highs in the local price

Source: Metals Focus; GFMS, Thomson Reuters; ICE Benchmark Administration; Datastream; World Gold Council

Data as of


  1. There had been some expectation that the government might reduce custom duty on gold in their February budget. In the event, custom duty remained unchanged at 10%.

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