Global jewellery demand during the six months ended June 30, 2016 dipped to its lowest levels since 2010 on the back of lacklustre consumer purchasing, particularly in price sensitive markets, including customary powerhouses India and China, the World Gold Council said in its latest issue of Gold Demand Trends released today.

There has been a record 25% surge in prices of the yellow metal during H1, the strongest H1 price gain since 1980, the report noted.

Data released by the industry body indicated that in US$ terms, value of first half global jewellery demand stood at US$ 36.3bn, while in volume terms, demand so far this year has lurked well below its five-year average – by around 20%.

The global body said that conversely, recycling has sparked into life; in H1 it generated 686.7 tonnes of gold almost a third of the gold supplied to the market. This is the highest first half total since 2012, which was a time when distress selling by Western consumers in the wake of the financial crisis was still high, and near-record gold prices were a strong incentive, the report noted.

Two markets bucked the overall trend, WGC reported, with jewellery demand rising by 1% in the US and by 10% in Iran during Q2. China and India saw drastic drops in Q2 of 15% to 144t and 20% to 98t respectively.

In India, demand was subdued to a number of factors, though resistance to higher prices was the most important, with the domestic price exceeding Rs 30,000, a psychological barrier and the highest levels seen in nearly two and a half years. The jeweller’s strike in early Q2, new government regulations and subdued rural demand as a fall out of the poor monsoon in 2015 all contributed as well.

Though high prices impacted Chinese demand as well, WGC states that the general economic slowdown, growing consumer preference for lighter weight and gen set jewellery as well new hallmarking legislation were other local factors that came into play.

News from the US was relatively better. Although the market was somewhat subdued ahead of the forthcoming Presidential elections, Mother’s Day sales helped US jewellery demand to its 10th consecutive quarter of year-on-year growth (+1% to 25.9t). Demand for the first half year of 48.6t was the strongest since 2009.

WGC says that consistent, if moderate, economic growth and improving employment levels are supporting demand in the US, although enthusiasm in the sector can be expected to wane over the coming months as the elections draw nearer.