May 03, 2019

WGC: India a Primary Driver as Global Gold Jewellery Demand Rises 1% in Q1 2019

Global gold jewellery demand rose by a marginal 1% in Q1 2019 to 530.3 tonnes (t), driven primarily by an upswing in demand from India, the World Gold Council (WGC) said while releasing its quarterly publication, Gold Demand Trends, yesterday. Overall demand for gold rose 7% during the quarter to 1053.3 t, mainly buoyed by strong demand from central banks and ETFs, the organisation reported. This was the highest level for Q1 since 2013.

While central banks bought 145.5t of gold in their quest for safety, liquidity and diversification, ETFs and similar products added 40.3 t in Q1, up 49% over Q1 2018 with strong demand from North America and Europe. Bars and coin investment diverged: bars lost 5% while coins grew 12%, WGC stated, adding that Japanese net disinvestment was a key driver of the fall in gold bar demand.

In the jewellery segment, which constitutes just over 50% of total demand, China continued to be the largest market with demand at 184.1 t, a 2% decline from the 187.5 t registered in Q1 2018. India, where demand rose 5% from 119.2 t last year to 125.4 t this year, boosted global demand along with the US where demand increased for the ninth consecutive quarter, gaining 1% to 24 t – the highest Q1 total since 2009. Demand in Turkey, another significant market continued to be hit by a decline in local currency vis-à-vis the dollar that pushed gold prices higher, with gold jewellery demand dropping 12% during the quarter to 8.9 t.

WGC said that Indian demand was boosted by a drop in gold prices towards the latter part of the quarter, combined with a rise in the number of auspicious days (three times more than in Q1 2018) which boosted wedding-related demand. Retail promotions, mainly discounts on jewellery-making charges, and campaigns by some retailers promoting low karat (14k), lightweight jewellery, specifically targeting younger consumers also boosted demand.

In China, the traditional boost from the Chinese New Year holiday was not strong enough to counter the headwinds from the slowdown in the domestic economy, particularly against the background of the international trade conflict, and relatively volatile gold prices. Many retailers have innovated and developed a new category of gold, ‘5G’ or ‘HD’ gold that offers the purity of 24k gold combined with the rigidity of 3D hard gold and the fashionable designs of 18k.

The US, the third largest gold jewellery market, witnessed its ninth consecutive quarter of y-o-y growth, gaining 1% to 24 t, but the pace of expansion slowed notably.

European jewellery demand slipped 1% to 12.7 t – on a par with Q1 2017. The regional weakness was chiefly due to losses in the UK and France, where demand was hit by the fragile economic outlook and political uncertainty.