5 November, 2019

Jewellery demand was weakened by higher prices, down 16% to 460.9t

  • Jewellery demand fell 16% to 460.9t in Q3, its lowest level since 2010
  • Consumers deferred purchases due to higher prices and the subdued economic sentiment 
  • US demand, however, continued to grow in Q3, up y-o-y for the eleventh consecutive quarter
Tonnes Q3'18 Q3'19   YoY
World total 546.2 460.9 -16%
India 148.8 101.6 -32%
China 176.6 156.3 -12%

Jewellery demand fell 16% y-o-y in Q3 to 460.9t, its lowest level since Q2 2010 (422.8t). Consumers were deterred from making fresh purchases during the quarter as the price rally – which began in June – gathered momentum. The quarterly average gold price in Q3 was US$1472.47 – 21% (or US$259.3/oz) higher y-o-y. This price pressure was exacerbated by concerns over the health of the global economy, which encouraged many consumers to moderate their buying plans. Bright spots were few and far between, with most markets seeing significant y-o-y declines, particularly in Asia and the Middle East.


Jewellery demand fell to its lowest level since 2010 due to the higher price

Jewellery demand fell to its lowest level since 2010 due to the higher price

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



Indian jewellery demand of 101.6t was almost a third lower y-o-y due to weaker consumer sentiment. Jewellery demand suffered as consumer confidence fell further over concerns around the slowing economy. Several indicators – such as lower sales volumes reported by large fast-moving consumer goods (FMCG) companies and domestic car/two-wheeler sales – pointed towards a slowdown in both urban and rural demand.1 Weak sentiment due to a liquidity crunch, excessive monsoon rains in some states, and the absence of any festivals, also influenced demand in the quarter.


Economic slowdown dampened urban and rural consumer sentiment in India

Economic slowdown dampened urban and rural consumer sentiment in India

Sources: Bloomberg, World Gold Council; Disclaimer


Demand received no support from the domestic price either. The gold price rally powered ahead during the quarter: it breached the Rs35,000/10g level in mid-July and continued climbing to Rs38,795/10g by the end of August, before  reaching an all-time high of Rs39,011/10g during the first week of September. The two-month leap of ~Rs5,000/10g – from Rs34,006/10g at the end of June – caught consumers completely off-guard, prompting many to delay buying. Despite a correction in the final few weeks of the quarter – due to the decrease in the international gold price and a strengthening rupee – the impact on demand was muted as it coincided with Pitru-Paksha, an inauspicious 16 lunar day period during which Hindus pay homage to their ancestors.2

Demand was further dented by a 2.5% rise in the custom duty to 12.5%. This higher rate hit sentiment amongst both the gold trade and consumers, and fresh jewellery purchases suffered as a result. Consumers preferred gold-to-gold exchanges, which accounted for an average of 50-60% of purchases, while retailers wound down existing stocks.

Wedding-related purchases provided some support during the quarter. Wedding days in the Southern states of Tamil Nadu, Kerala and Karnataka supported jewellery demand during August and September. But volumes were 15-20% lower y-o-y due to the higher gold price. Jewellery retailers attempted to counter this by offering promotions – such as discounts on labour charges – but with limited impact.


Jewellery demand in China declined 12% y-o-y in Q3 to 156.3t. This is 10% below the five-year quarterly average of 173.5t and the fourth consecutive quarter of y-o-y declines. Concerns over the health of the Chinese economy, as well as rising inflation in staples such as pork, meant that consumers prioritised spending elsewhere.

Plain and mass-appeal 24K gold jewellery suffered a double-digit y-o-y decline in Q3. As these products account for the largest segment in the market, this dragged overall jewellery demand lower. But there were bright spots during the quarter. Most retailers saw growth in the sales of 3D hard gold, 5G gold and other innovative products with lightweight and fashionable designs that appeal to younger consumers. Growth in these high-margin products also helped shore up jewellers’ profits during the quarter. But the lower market share and lighter per-piece weight of these innovative products meant that their sales growth couldn’t reverse the falling trend in jewellery demand. Talks with our trade partners in the industry indicate that lighter, more aesthetic products are growing in popularity- consequently, these products are expected to take a larger share of the market in the longer run.

In what has become an increasingly visible trend, the traditional jewellery sales boost again failed to materialise during the long National Day holiday in October. As we mentioned in Gold Demand Trends Full Year 2018, the relevance of the golden week holiday as a shopping occasion has been fading over recent years. Consumers, especially the younger generation, prefer to spend their money on experiential purchases. According to the Ministry of Commerce, there were 782 million domestic tourist trips made in China during the holiday, a rise of 8% y-o-y. In addition, China’s mainland box office revenue increased by more than 100% y-o-y during golden week.


Momentum in the gold price rally during Q3 kept consumers on the sidelines

Momentum in the gold price rally during Q3 kept consumers on the side-lines

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

Index level 01/01/2018 = 100


Middle East and Turkey

Demand for jewellery across the Middle East fell 12% to 35.3t, with nearly all markets seeing significant declines. With their local currencies pegged to the US dollar, consumers in both the UAE and Saudi Arabia were exposed to the full rise in the international gold price. In the UAE, gold jewellery demand fell 21% to 5.4t, while in Saudi Arabia it dropped 26% to 8.8t. The higher gold price was the primary reason for weaker demand, but consumer sentiment was also depressed due to concerns over regional economic growth and security. In Egypt, the y-o-y decline was more modest – down 5% to 7t – as the stability in the pound helped to offset the rise in the US dollar price.

Turkey and Iran were the two exceptions in an otherwise dismal picture, although this was almost entirely due to the low-base effect. Despite the local gold price surpassing last year’s record highs, Turkish jewellery demand grew by 5% to 7.6t in Q3. However, the y-o-y comparison is flattered by Q3 2018 demand totalling just 7.2t, the lowest level of demand since Q4 2012. Iran recorded the largest y-o-y increase in Q3, rising by 32% to 6.1t. This marks a significant recovery from Q3 2018, when jewellery demand collapsed by almost 60% y-o-y to 4.6t, the lowest level in our records. The modest recovery in the Iranian rial, which begun in May, helped offset some of the rise in the international gold price this year.

The West

In the US, jewellery demand in Q3 was 1% higher y-o-y at 28.5t. While this is the eleventh consecutive quarter of growth, it was at a slower pace than in Q2 (+3%). Consumer confidence in the economy remained upbeat during the quarter, helping to support sales, but deteriorated slightly compared to the first half of the year. Demand was also hampered by the substantial rise in the gold price during Q3.

European jewellery demand fell fractionally in Q3, down 1% to 12.4t. Faced with record prices in both euros and sterling during the quarter, and ongoing concerns over the health of European economies, consumers remained cautious with their spending. The largest y-o-y decline was seen in the UK: demand fell 4% to 4.4t with concerns surrounding Brexit intensifying as politicians and negotiators raced to reach an agreement ahead of the 31 October deadline. Modest y-o-y increases in France and Spain failed to offset the overall decline across the region.  

Other Asia

Fears over an economic slowdown and higher gold prices dented demand in smaller Asian markets. Faced with a record local gold price amidst sluggish economic activity, Indonesian consumers reduced their jewellery demand by 15% in Q3 to 8.8t. This is the lowest level in three years, and 10% below the five-year quarterly average of 9.8t. Under these conditions, selling back took precedence over new purchases.

Vietnamese jewellery demand declined by 12% y-o-y to 3.6t, the lowest level of demand since Q3 2016 and the first y-o-y decline since Q1 2017. Both consumers and retailers remained cautious over the rising local gold price (which reached an eight-year high) and heightened volatility in the local currency. In Thailand, jewellery demand fell sharply by 12% y-o-y to 2.7t, due to the higher gold price and weaker economic growth.

By contrast, the picture in Japan appears relatively healthy. Jewellery demand rose by 5% to 4.2t. Despite the higher gold price, demand for the popular Kihei gold chains – plain, heavy gold chains that serve as quasi-investment products – held up well.


  1. Pitru-Paksha occurred between 13 - 28 September.

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