Global jewellery demand dropped by 16% to 460.9 tonnes in Q3, 2019 due to weak consumer sentiment on account of continued geopolitical and economic uncertainty, coupled with substantially higher gold prices, according to figures released by the World Gold Council (WGC) as part of its Gold Demand Trends Q3 2019 report.

Both major markets, India and China, recorded double digit declines in demand, WGC added, taking overall gold demand from the jewellery industry to its lowest level since Q2 2010 (422.8t).

Consumers in most markets appear to have chosen to defer purchases due to higher prices and the subdued economic sentiment, resulting in y-o-y declines. The major exception was the US, where demand, however, continued to grow in Q3, up y-o-y for the eleventh consecutive quarter.

In India, jewellery demand during the quarter dropped to101.6t, almost a third lower y-o-y. As consumer confidence fell primarily over concerns around the slowing economy, domestic prices breached the Rs 35,000/10g level in mid-July and climbed to an all-time high of Rs 39,011/10g during the first week of September. Demand was further dented by a 2.5% rise in the custom duty on gold to 12.5%. However, wedding-related purchases provided some support during the quarter, though even here volumes were about 15-20% lower y-o-y.

In China too, jewellery demand declined 12% y-o-y in Q3 to 156.3t, 10% below the five-year quarterly average of 173.5t and the fourth consecutive quarter of y-o-y declines. There were concerns over the health of the Chinese economy, as well as rising inflation in staples. While plain and mass-appeal 24K gold jewellery (the largest segment in the market) suffered a double-digit y-o-y decline in Q3, there was some growth in the sales of 3D hard gold, 5G gold and other innovative products with lightweight and fashionable designs that appeal to younger consumers. Moreover, the traditional jewellery sales boost again failed to materialise during the long National Day holiday in October.

A similar trend was seen across most of the Middle East, where most local currencies are pegged to the US dollar, leaving consumers 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. Turkey and Iran were exceptions, but this was almost entirely due to the low-base effect.

Trends in the US were more positive, with jewellery demand in Q3 being 1% higher y-o-y at 28.5t, marking the eleventh consecutive quarter of growth. However, this was at a slower pace than in Q2 (+3%), as consumer confidence though upbeat, deteriorated slightly compared to the first half of the year.

Japan too appeared relatively healthy as jewellery demand rose by 5% to 4.2t.