Gold Jewelry Demand Drops to Lowest Level Since 2010

(IDEX Online) - Figures released by the Gold Council today (Tuesday) show demand for gold jewelry fell 16 percent year-over-year in the third quarter, to its lowest level since 2010. Demand stood at 460.9 tons as consumers shied away from buying because of higher prices and subdued economic sentiment. 

However, it was not all bad news for the yellow metal. Demand in the U.S. grew for the eleventh consecutive quarter and was 1 percent higher year-over-year at 28.5 tons. 

Indian jewelry demand fell 32 percent to 101.6 tons, down almost a third year-over-year, because of weaker consumer sentiment. Demand was also subdued because of a lack of festivals during the quarter and heavy monsoon rains in some states. 

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

Even wedding-related purchases provided could not make much impact with sales 15-20 percent lower year-over-year because of higher prices.

In China, jewelry demand fell 12 percent to 156.3 tons. Plain and mass-appeal 24-karat jewelry, the largest segment in the market, suffered a double-digit year-over-year decline in Q3. As these products account for the largest segment in the market, this dragged overall jewellery demand lower. 

The Gold Council reports that 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. However, it wasn't enough to reverse the fall in demand. Nor was the National Day holiday in October. While it was once a key gold-buying occasion, younger consumers are opting for experiences over consumerism.  

Jewelry demand also fell in the Middle East (-12 percent) with the UAE and Saudi Arabia hard hit with a 21-percent and 26-percent drop in demand, respectively. 

See the full report here.