Feb 07, 2018

WGC: Global Gold Jewellery Demand Up 4% in 2017; First Year of Growth Since 2013

Global gold jewellery demand during 2017 increased by 4% to 2,135.5 tonnes (t), the first year of growth since 2013, driven by stable gold prices and improving economic conditions, the World Gold Council said while releasing its Gold Demand Trends report for the full year. The sector witnessed a strong Q4 and an overall strenghtening of demand in the two largest markets, India and China, However, demand still remains below historical averages, WGC added.

Overall, global gold demand declined by 7% to 4,071.7t,  despite a 6% gain in Q4, which WGC described as “too little, too late”. The drop in demand was largely investment related – with inflow into ETFs being almost a third of the record levels reached in 2016, and demand for coins declining by 10%.

On the jewellery front, India recorded a huge 12% growth to 562.7t, though the surge was at least partly due to a very weak 2016, China saw a more modest 3% increase to 646.9t and the US market gained 3% to 122.1t, as Q4 demand of 46.1t was the highest fourth quarter for US jewellery since 2009.

In India, the fourth quarter saw strong gains to 189.6t, the highest fourth quarter in WGC’s 17-year series. Strong buying during the Dhanteras festival, which was boosted by a dip in prices, the government’s decision to withdraw the anti-money laundering regulation from the jewellery sector and improved rural sentiment. WGC notes that the Indian market is likely to see a continued recovery in demand as the market increasingly accepts, and adapts to, GST, with the relative outperformance of chain stores and organised retailers being a key feature of this process.

In China, a strengthening of holiday purchases with retail trade more effectively targeting consumer needs. The trend for lower-weight, better designed, higher-margin ‘premium’ gold jewellery grew stronger. There is a rise in demand for 18k, 22k and 3D hard products, and although 24-carat gold still dominates the market, it is fast losing market share - notably in tier 1 and 2 cities. Online sales too are growing in popularity, and WGC believes that the outlook is positive, with sentiment lifted by the supportive economic environment.

Among the other major markets, demand remained subdued or weak across the Middle East and most of Asia. But in the US, annual jewellery demand gained 3% to 122.1t. Q4 demand reached an eight-year high as the improving economic environment buoyed sentiment – and demand. However, annual demand still remains long way from levels achieved in earlier years.