Gold Demand Trends Q2 2019

1 August, 2019


Modest growth in Q2 jewellery demand, up 2% to 531.7t

  • H1 demand was marginally firmer at 1,061.9t – a four-year high
  • Indian demand was boosted early in the quarter by the wedding season and festival buying, before slowing sharply as the gold price rallied in June
  • Chinese jewellery consumption followed a similar pattern: modest growth in April and May was followed by a collapse in demand as gold prices rocketed and consumer sentiment withered.
Tonnes Q2'18 Q2'19   YoY
World total 520.8 531.7 2%
India 149.9 168.6 12%
China 144.1 137.8 -4%

Gold jewellery consumption in Q2 2019 of 531.7t was 2% higher than Q2 2018. Total H1 demand of 1,061.9t was up 1% on last year’s 1,048.2t. Much of this growth came from India, where the jewellery market improved from the low base of 2018. There were a few areas of modest improvement, including the US and a handful of Middle Eastern countries, but the June price rally curtailed jewellery demand across many markets.

The sharp rise in the US dollar gold price in June was replicated – if not exceeded – by the gold price in other currencies. This had mixed implications for demand in those markets where retail prices more closely respond to the underlying gold price, including much of Asia and the Middle East. For consumers who saw it as the beginning of an extended rally, it was a signal to buy before prices rose further. For others, it was a signal to hold off and wait for prices to settle or fall back.


US$ gold price rise was matched – or exceeded – by the price in other currencies

US$ gold price rise was matched – or exceeded – by the price in other currencies

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

Index level 01/01/2018 = 100



Indian jewellery demand had its best quarter of y-o-y growth since Q2 2017. Demand gained 18.7t (12%), to 168.6t compared with 149.9t in Q2 2018, largely due to two factors: a higher number of auspicious wedding days compared with 2018, and local gold prices moving lower from the levels seen in February and March.

Wedding season and festival-buying spurred by lower intra-year gold prices in April and May. In a similar trend to Q1, a higher number of auspicious wedding days in Q2 compared with last year (37 vs. 21) was a boon to India’s jewellery market during the first two months of the quarter. 


Higher number of wedding days was positive for H1 Indian jewellery

Higher number of wedding days was positive for H1 Indian jewellery demand

Sources: Drik Panchang, World Gold Council; Disclaimer


The fact that this coincided with a fall in gold prices from Q1 magnified the positive impact: prices dropped to around Rs31,500-31,600/10g compared with Rs 32,000/10g at the end of March. And with prices almost Rs2000/10g lower than the Rs33,500/10g seen in February, consumers rushed to purchase gold on the auspicious day of Akshaya Tritiya (7 May). Purchases were strong in southern and western India; the southern states of Karnataka, Tamil Nadu and Kerala witnessed particularly robust Akshaya Tritiya sales.

But India was not without its headwinds. The slowing economic environment and restrictions on the movement of cash during the elections were a drag on demand in April and May. As the wedding season came to an end, the monsoon set in. And then the gold price rocketed. 

Demand fizzled out in June as the gold price took off, reaching new highs. Mirroring the rise in the US dollar price, the domestic gold price traced a steep upward trajectory, breaching Rs33,500/10g by 20 June to reach a near-record Rs34,006/10g. With such lofty domestic prices, demand almost ground to a halt in the last ten days of the quarter. Retailers ran promotional campaigns to attract consumers – for example, offering discounts on labour charges – but consumers steered clear, wary of the sharp price volatility. In its quarterly update, Titan commented that, “The quarter witnessed a tough macro-economic environment with consumption being hit. Very high gold prices particularly in June also impacted growth in the Jewellery industry.” 

As demand tailed off sharply, the price discount in the local market reached US$23/oz by the end of the quarter – a level not seen since August 2016.

Higher customs duty curbs the outlook for Q3. A contributory factor to the subdued demand in June was an expectation among consumers that the Indian government would announce a reduction in customs duty on gold in its early July budget. As it transpired, these hopes were entirely unfounded: the duty on gold was raised by 2.5%. Although we do not expect this to have a long-term impact on gold demand in India, we do see it having a dampening impact on Q3, particularly as gold prices have remained elevated.


China’s jewellery market saw a third consecutive quarter of y-o-y decline. Jewellery demand in Q2 dropped 4% y-o-y to 137.8t. When combined with the relatively soft Q1 number, this resulted in a 3% decline in H1 demand, to 321.4t.  

In what is traditionally a seasonally slow quarter, Chinese jewellery demand was relatively upbeat in April and May as showrooms tempted consumers with promotions and continued innovation/development of premium products. But demand ground to a halt once the June price rally began and retailer’s promotional efforts could not tempt consumers back. Reportedly, showrooms were deserted as the quarter came to a close. 

Notwithstanding the difficult conditions witnessed in the final few weeks of the quarter, the retail landscape continues to develop as leading brands expand their networks and extend their reach into lower-tier cities. Chow Tai Fook, for example, opened a net 115 stores in mainland China during the quarter. Chow Tai Fook, for example, opened a net 115 stores in mainland China during the quarter.

Consumers continue to shift their attention towards the more innovative and higher-purity, premium ranges that have been developed by the industry in recent years, and in part this reflects the efforts of the trade in promoting these higher-margin products. Sales of ultra-high purity, 99.999% pure gold jewellery continued to grow, as did the new “5G” gold sector – although the latter remains small compared with other categories.

Middle East & Turkey

Middle Eastern demand grew fractionally: several markets across the region improved, led by an 8% recovery in Egypt. Jewellery demand in Egypt registered its sixth consecutive quarter of y-o-y growth amid continued improvement in the domestic economic environment. H1 demand totalled 12.5t – a level last seen in 2016. But the market remains very weak on a historical basis and continued currency stability failed to compensate for the sharp rise in the US dollar gold price, which put the brakes on demand during June.

Iran saw a sixth consecutive quarter of weakness: down 5% y-o-y to 6.3t. The country remained in the grip of international sanctions and the beleaguered local currency sent local gold prices soaring – the monthly average price in May was at record highs. With no respite foreseen, there is little optimism in the outlook for the remainder of the year. 

High gold prices and the challenging economic environment were behind the 4% y-o-y decline in Q2 Turkish jewellery demand. This pushed H1 demand to a three-year low of 18.6t. Weak consumer spending, stubbornly high unemployment and the turbulent political scenario undermined already fragile consumer sentiment. Coupled with continued depreciation of the lira – which pushed local gold prices back up towards 2018’s record highs – the picture for jewellery demand was unsurprisingly weak. 

The West

Tenth consecutive quarter of growth in US jewellery demand lifted H1 to a decade high of 53.4t. The world’s third largest jewellery market recovered from the effect of the Q4 2018/Q1 2019 government shutdown and consumer confidence rallied in the first two months of the quarter, before slipping back in June as concerns grew over the trade war with China. 

Europe saw marginal losses in Q2: demand edged down to 14.3t. Modest improvements in France and Germany failed to match losses in the UK and Italy, due to Brexit concerns and fragile consumer confidence respectively. As a region, Europe accounts for just 3% of global jewellery demand.

Other Asia

Q2 was another quarter of mixed fortunes for the smaller Asian markets: Thailand experienced a sharp fall while Indonesia saw strong gains. Relatively weak economic growth, political instability and stricter controls on high-value transactions knocked jewellery demand in Thailand to its lowest for almost six years. Demand dropped 12% to just 2.2t. 

Despite the sharp price rise, consumers in Indonesia bought 11.8t of jewellery in Q2 – their highest rate of quarterly buying since Q1 2015. An already healthy rate of economic growth may be bolstered by lower corporate tax rates (a key election pledge of President Joko Widodo), which – over the longer term – bodes well for disposable income and jewellery growth. 

Vietnamese demand was 2% higher y-o-y, largely due to a strong performance in April and May (when prices were relatively low), and this offset a downturn in June once the price rise began. The healthy economic growth that has continued to support the market, is reflected in the expansion of the retail network. Major jewellers, such as PNJ and DOJI boast aggressive expansion plans, with bold targets for the number of retail outlets they plan to open in 2019/2020.

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