2 August, 2017

Global jewellery demand strengthened from 2016’s low base, but fell short of longer-term levels

  • Strong gains in India led the recovery, largely due to the weakness of 2016
  • Fleet-footed Chinese jewellers continue to adapt in innovative ways to shifting consumer tastes
  • Turkey saw a strong response to a sharp drop in the local gold price
Tonnes Q2'16 Q2'17 YoY
World total 446.8 480.8 8%
India 89.8 126.7 41%
China 145.6 137.7 -5%

Global demand for gold jewellery of 480.8t was 8% higher y-o-y, but Q2 2016 was itself very weak; demand remained well below the five-year quarterly average of 586.2t. The H1 picture was similar: demand grew 5% from the very low levels of 2016, but at 967.4t, H1 jewellery demand was below 1,000t for only the fourth time in our data series.


H1 Jewellery demand recovered but remained below 1,000t

GDT Q2 2017 Jewellery - H1 Jewellery demand recovered but remained below 1,000t

Note: You can turn items in this legend on/off

Source: Metals Focus; GFMS, Thomson Reuters; World Gold Council

Data as of


India drove global Q2 jewellery demand growth almost single-handedly. Demand shot up to 126.7t compared with just 89.8t in Q2 2016. The strong recovery had been widely expected after exceptional import figures were reported, hitting an all-time high of 104.6t in May as the market stockpiled gold ahead of the June GST rate announcement. Expecting a punitive GST rate, jewellers and consumers alike crammed their purchases into the first two months of the quarter, slowing down once the government confirmed that a 3% rate would be applied. Another brief flurry at the end of June, before the rollout of GST in July, pushed local prices to a premium of around US$3-4/oz above the international price, although some traders reported paying a premium as high as US$10/oz in some instances.


Indian prices rose to a small premium in June as GST rollout drew near

GDT Q2 2017 Jewellery - Indian prices rose to a small premium in June as GST rollout drew near

Source: National Commodity & Derivatives Exchange Ltd; World Gold Council

Data as of

Demand was boosted by festivals, weddings and improved rural sentiment. Akshaya Tritiya – a key gold-buying festival in the Hindu calendar – boosted gold jewellery demand in the usual way. But the timing of the festival this year, falling as it did over a weekend and coinciding with a dip in the gold price, proved particularly encouraging. Estimates suggest that Akshaya Tritiya-related sales were up by around 30% y-o-y. 

Rural sentiment improved further as the government continued to replace the currency that was plucked from the system by demonetisation in November. Although the pace of remonetisation has slowed (particularly as digital transactions have gained  popularity) the value of currency in circulation has recovered to around Rs15.4trn – around 86% of the pre-demonetisation value. This greater liquidity has boosted rural purchases, along with expectations of a good monsoon rainfall and the positive impact of a higher number of auspicious wedding days in the Hindu calendar (26 auspicious days in Q2 this year, compared with just 8 in Q2 2016).

Outlook muted for H2. Although the 3% GST rate was lower than many in India had anticipated, we expect the new tax is likely to cause some short-term disruption as manufacturers, retailers, importers and consumers adapt to the new regime.1 As consumers and importers brought forward their purchases to Q2, demand will likely be subdued for a few weeks. Stock is plentiful across the supply chain and consumers who have recently purchased are unlikely to do so again in the short term. As the market digests this gold, and adapts to GST, we feel the market environment should become more settled towards the end of the year. This, we believe, should be helpful for gold demand – particularly as the key October festival season approaches.


Chinese jewellery demand weakened again, but the pace of slowdown has moderated this year. Jewellery demand of 137.7t (down 5% y-o-y) was the lowest Q2 in China for five years. But the overall downward trend of the last three years has slowed so far in 2017: H1 demand was 4% below H1 2016.

A shift away from pure 24k gold to lower-carat, higher-designed and higher-margin gold jewellery remained the dominant trend. This continued move away from traditional plain 24k jewellery is in part driven by consumers expressing their individuality and differentiating themselves from older generations. But it is also an industry-driven trend. Retailers and manufacturers strive to prosper in a competitive industry by enticing consumers with new, innovative and – crucially – higher margin product. Chow Tai Fook, for example, launched a 22k collection in May. The range is high purity, with cutting edge designs, targeted at younger consumers and priced on a ‘per piece’ basis rather than by weight of fine gold.

Other companies have also launched innovative ventures to attract younger consumers. One noteworthy example is that of Luk Fook’s partnership with Tencent’s smartphone-based online game ‘Honour of Kings’ to produce a championship ring for the game’s King Pro League. The game has 50 million active players, (most of whom are under 25) largely due to successful promotion on WeChat (Tencent’s ubiquitous social media platform). Despite the wide appeal of such products, their lower fine-gold content means they cannot prevent erosion in the volume of jewellery demand.

Headwinds buffeting Chinese jewellery demand may subside. Jewellery demand faces ongoing challenges: as younger consumers continue to pull away from the tradition of 24k gold, higher-margin, lower-gold-content products are being developed to fill the void. But so far this year, the pace of decline has moderated and, as the industry effectively targets key consumer segments, we feel the market may start to bottom out following the steady decline from its 2013 peak.

Other Asia

Smaller Asian markets were broadly firmer with a couple of minor exceptions: Vietnam led the way with a 10% y-o-y gain. Jewellery demand in Vietnam reached 3.9t in Q2, the highest second quarter for jewellery demand since 2008, as the market continues to recover from the lows reached in 2012. Accelerating economic growth provided a positive backdrop, although demand was boosted more specifically by fierce competition between leading jewellery manufacturers Phu Nhuan Jewelry and DOJI Jewelry Group, which saw both companies expanding their national network of retail outlets.

Middle East & Turkey

A dip in the local gold price triggered a strong response in Turkey: jewellery demand was up 20% y-o-y. The Turkish lira strengthened in value against the US$ throughout the quarter, causing quite a sharp dip in the local gold price in late-March/early-April. After lira prices had reached record levels in March, the drop sent a strong signal to consumers to buy, particularly as the wedding season approached. Demand has been underpinned by continued support from the Turkish government, albeit support that has focused on gold as an investment. 

Regional jewellery demand was flat for the Middle East, disguising some sharp country-level divergences. Demand in Egypt dropped 20% y-o-y, hitting a new low of 4.7t. The Egyptian pound remains very weak, keeping local gold prices elevated. The central bank raised interest rates during the quarter in an effort to halt the currency’s decline, but this action served to undermine consumer appetite for gold jewellery. By contrast Iran’s jewellery market gained further strength: Q2 demand rose by 15% to 10.2t as consumer sentiment was buoyed by Hassan Rouhani’s landslide victory in the Presidential elections and expectations that interest rates may come down later in the year. H1 demand was 20% higher at 22.9t – the highest first half total for four years. 

The West

The US market continues to creep up, building on the base established in 2012. Q2 tonnage was up 4% y-o-y at 26.9t, still a little shy of the five-year quarterly average of 28.9t. Demand in the first half of 2017 has been lifted by improving consumer sentiment, resulting in H1 demand growing 4% to reach 49.9t - the highest first half total since H1’09.

Q2 jewellery demand in Europe was weak: down 4% across the region. Demand was particularly anaemic in the UK, where prolonged uncertainty over Brexit deterred anxious consumers. Q2 demand fell 10% to a three-year low of 3.8t. Italian demand stabilised at 4t in Q2. Expectations are building for the long-term downtrend in the market to come to an end and – possibly – even for the market to manage some growth in the latter half of this year.


  1. For more detail on the impact of GST on India’s gold market, please see Market Update: GST’s impact on India’s gold market.

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