1 November, 2018

Jewellery demand up 6% in Q3 as lower gold prices enticed consumers

  • Indian jewellery demand grew 10% as the price dip attracted bargain hunters
  • Demand continued to improve in China, boosted by the Qixi Festival
  • Substantial declines were seen in some Middle Eastern markets
Tonnes Q3'17 Q3'18 YoY
World total 505.8 535.7 6%
India 134.8 148.8 10%
China 158.5 174.2 10%

Price-conscious consumers took advantage of a declining gold price to boost Q3 demand. Demand for jewellery increased by 6% y-o-y, to 535.7t. India, China and several South-East Asian markets saw respectable y-o-y increases, while demand in Iran, Turkey and the UAE fell significantly.


Gold price decline proved to be a buying opportunity in many market

Gold price decline proved to be a buying opportunity in many markets

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

Note: Index level 01/01/2018 = 100


After two consecutive quarters of y-o-y declines, Q3 saw jewellery demand in India grow by 10% to 148.8t. While demand was firm  during the quarter – virtually in line with the five-year quarterly average of 147.5t –  the y-o-y growth  should be viewed in comparison to a relatively weak Q3’17. Demand suffered in the third quarter last year, as some purchases were brought forward into Q2 in anticipation of the new pan-India Goods & Services Tax. And in August 2017, gold jewellery retailers grappled with the extension of the Prevention of Money Laundering Act (PMLA) and its application to the gems and jewellery sector.1

Q3’18 demand was boosted in early August when the local gold price dipped below Rs29,700/10g – the lowest level since January. This attracted bargain-hunting consumers who had been waiting for a good time to enter the market. Mid-August saw a sharp rise in the local gold price as the rupee depreciated against the US dollar. Outside the traditional festival and wedding season, demand eased towards the end of the month and into September. Jewellery demand was further dampened by the inauspicious period of Shraaddh (also known as Pitru Paksha), a time when gold purchases are put on hold.2

Q3 Kerala jewellery demand was impacted only marginally by floods. Heavy floods in the important gold-buying centre of Kerala during July and August negatively impacted gold demand; jewellers in the region reported muted sales during Onam.3 But demand was buoyed by marriages during the quarter, helping to offset the impact.

While the price dip in August was a helpful boost to the industry, it highlighted a structural challenge jewellers faces. Retailers’ main strategy to generating sales has been to compete on price. For example, offering price discounts or attractive gold-for-gold exchange programmes during festivals. While a few large, organised retailers have developed brands, little effort has been put into tailored marketing campaigns. As consumer tastes change, and competition from other product categories intensifies, the industry needs to ensure it develops products and marketing campaigns which meets potential consumers’ desires. 


Chinese jewellery demand totalled 174.2t in Q3, a 10% increase over Q3’17. Demand benefitted from the Qixi and Mid-Autumn festivals that took place during the quarter but sales were lacklustre during the National Holiday week as people chose travel over shopping, especially those in tier 1 and 2 cities.

Jewellery sales during the Qixi festival (China’s equivalent of Valentine’s Day) were strong. Over recent years, retailers across all product categories have developed this festival as a buying occasion, a strategy that has proved especially effective amongst younger consumers. And despite the major annual jewellery fairs in Shenzhen and Hong Kong being slightly disrupted by Typhoon Mangkhut, several manufacturers reported healthy sales growth.


China's jewellery market continued to grow

China's jewellery market continued to grow

Data as of

Sources: GFMS, Metals Focus, Thomson Reuters, World Gold Council; Disclaimer

Extending the recent trend, retailers are becoming more adept at developing innovative products. 3D hard gold products again outperformed all other product segments. These appeal to retailers and consumers alike, providing high-margins to the former and contemporary designs to the latter. 24-carat demand – still the largest segment of the market –  also saw a notable rise thanks to an evolving product mix, with a shift towards more premium pieces.4 Ultra-high purity products such as 9999s and 99999s (99.99% and 99.999% pure gold respectively) performed well, although demand appears to be limited.

Middle East and Turkey

Middle Eastern jewellery demand remained under pressure in the face of geopolitical stress, down 12% y-o-y to 37.7t. Iranian jewellery demand saw the largest fall in the region for the second consecutive quarter, down almost 60% y-o-y in Q3. Y-t-d, demand has shrunk by 36%, suffering under renewed economic sanctions and the steep decline in the rial. By contrast, VAT-exempt bars and coins benefited from a flight to safety. Please see the investment section for more detail.

A rising and volatile gold price during Q3 saw demand in Turkey slump 31% y-o-y. The trajectory of the gold price during the quarter, set against a backdrop of political and economic uncertainty, convinced consumers to remain on the sidelines. After spiking earlier in the year, local prices again jumped in mid-August to an intra-day high of TL273/g, when the lira fell to an all-time low against the US dollar . This prompted a wave of recycling rather than fresh jewellery (and investment) purchases. As high price volatility continued throughout Q3, jewellery buyers shied away from spending decisions. 

Egypt stood out from the crowd with a 17% y-o-y rise in jewellery demand. This marked the third consecutive quarter of growth for a market that has struggled in recent years, although this is in comparison to a low base period. The increase in jewellery buying was due to continued improvements in the country’s economic situation. Stabilisation of the Egyptian pound – after a fall of over 1.5% in May – and consumers now accustomed to higher gold prices (which eased slightly in Q3), also benefitted gold.


Heavy losses in Iran and Turkey dwarf modest gains in Egypt

Heavy losses in Iran and Turkey dwarf modest gains in Egypt

Data as of

Sources: Metals Focus, World Gold Council; Disclaimer

Jewellery demand in the UAE and Saudi Arabia saw contrasting fortunes. In the UAE, jewellery demand fell to 6t (-13% y-o-y) as the market continued to feel the impact of the 5% VAT introduced last year, as well as a general economic downturn and fears over job security. Depreciation of the Indian rupee also affected demand from the important Indian expat community. The direction of jewellery demand in the UAE remains under question, particularly as some retailers registered losses for the first time. In Saudi Arabia, jewellery demand rose 7% y-o-y to 11.9t. As the riyal is pegged to the US dollar, local consumers were able to benefit fully from the falling gold price, while rising oil prices boosted their confidence. 

The West

Gold jewellery demand in the US remained buoyant, growing 4% to 28.3t in Q3. Economic confidence was high throughout the quarter, with the S&P 500 index rising by over 7%. This has helped boost discretionary spending on gold jewellery, especially plain yellow gold pieces. Retailers such as Tiffany’s and Signet have reported positive results in recent months, supporting a more optimistic outlook for the US jewellery market. 

Europe-wide jewellery demand was little changed in the quarter, up 1% y-o-y to 12.7t. But a more mixed picture emerges at country-level. Both France and Italy experienced economic sluggishness, and the distraction of the World Cup in the former weighed on jewellery demand. In the UK, uncertainty around Brexit remained a drag on demand.

Other Asia

An uplift in jewellery demand was seen across east and south-east Asia. Growth in jewellery demand across all key Asian markets was a direct result of lower local gold prices during the quarter. 

In Thailand, fears of further currency depreciation as well as a dip in the international gold price  attracted bargain-hungry consumers, increasing jewellery demand by 12% to 3.1t. Gold buying was boosted by fears of further devaluation in the local currency, despite a small recovery in recent months. Jewellery demand grew 11% y-o-y in both Indonesia and Malaysia, driven principally by lower local gold prices, while fears of further falls in the rupiah supported safe-haven buying in Indonesia. In Vietnam, jewellery demand benefitted from lower gold prices, strong domestic growth and currency depreciation, rising 10% y-o-y.


  1. A fortnight of religious significance during which it is not propitious for Hindus to buy gold

  2. Onam (late August/early September) is Kharif crop harvest festival, which is celebrated in Kerala

  3. The emergence and success of “antique-crafted gold” – pieces that feature traditional designs in 24K – is an example of the innovation now evident in the Chinese jewellery market.

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