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Gold demand trends second quarter 2020



- Global jewellery demand almost halved in H1, falling 46% y-o-y to a new low for our series of 572t

- Q2 demand reached a record quarterly low of 251t (-53% y-o-y) as consumers across the globe felt the impact of market lockdown and the resultant economic slowdown

- China – the earliest market to emerge from lockdown – was alone in witnessing a q-o-q recovery from extreme Q1 weakness.

Q2 saw a continuation of the hostile global environment for gold jewellery demand. Lockdown restrictions shuttered many markets, and consumers faced the challenging consequences of economic downturn at a time when gold prices were moving from strength to strength, making affordability an issue for many.

Gold jewellery demand for H1 of 572t is around half the 10-year average of 1,106t. Jewellery demand measured in value terms was similarly weak, despite the strength in gold prices over the period; the H1 value of US$30.1 billion (bn) is the lowest since 2009 – a time when the US dollar gold price was roughly 50% of recent levels.

China and India were the biggest contributors to the decline in H1 demand: their size relative to the rest of the gold jewellery market means weakness in these two countries has an overwhelming impact on global demand.


China’s Q2 jewellery demand was down 33% y-o-y at 90.9t. This took H1 to 152.2t – a 52% decline y-o-y and its lowest since H1 2007, due to COVID-19’s lasting impact on consumer wallets.

There was, however, a sizable q-o-q rebound in China’s jewellery demand in Q2. With the virus being well contained, the market re-opened in March and the resultant economic upturn helped relieve some pressure on consumer incomes. Nevertheless, demand in H1 remained extremely muted. Most retailers attributed the continued weakness to a combination of high and rising gold prices, falling disposable incomes and an increased preference for lighter-weight gold jewellery products.

The RMB gold price increased by more than 9% during the quarter, reaching a historic high of RMB403/g in May. Meanwhile, unemployment was up in 31 of China’s main cities, while an index of confidence in consumer future incomes hovered around multi-year lows. And according to the Bureau of Statistics, consumers’ recreational expenditure dropped by 36% in H1.1

Lightweight, innovative and intricately designed hard- 24K gold products continued to grab consumers’ attention in Q2. Several factors explain the growth of lighter-weight jewellery. Firstly, the taste of younger consumers continues to shift away from chunky pure gold pieces to lighter-weighted products with trendy designs at more affordable prices. Second, as consumers’ limit their expenditure on non-necessities in general amid the challenging economic circumstances, lighter-weight pieces are more budget friendly, especially when local gold prices are surging. And third, retailers are keen to promote these products, given their more attractive margins relative to traditional 24k gold products.

According to our trade partners in the industry, wedding demand could be key to a recovery in China’s gold jewellery market in H2. Many Chinese couples have postponed their wedding plans to the second half of 2020 after the strict restrictions imposed on large gatherings in H1. Combined with the fact that October and December are traditionally peak months for weddings, a surge in ceremonies in the second half is widely expected by most jewellers, which should contribute to a more positive in the second half of the year.


Indian jewellery demand plunged in Q2 due to nationwide lockdown, lost festival demand and the higher gold price. Indian jewellery demand fell 74% y-o-y to 44t – the lowest quarterly total in our series by some margin. H1 demand was down 60% to an all-time low for our series of 117.8t.

The strict lockdown imposed in late March ran through until mid-May, encompassing the all-important gold buying festival of Akshaya Tritiya – one of the most auspicious days for buying gold in India. This year, however, the country-wide lockdown meant that physical store sales were not possible, and only those retailers with an online presence were able to cater to demand. Sales were trivial in comparison with the previous year.

As restrictions eased mid-quarter, activity started to recover in select regions. June saw a further improvement, with the release of some pent-up demand. However, a lack of weddings and auspicious days in the month, along with recurring lockdowns in certain regions and the high and rising gold price, prevented a meaningful recovery in demand.

Discretionary spending on gold jewellery shrank due to concerns around economic growth, future income and higher gold prices. India’s GDP growth has been on a downward trajectory since Q1 2019 and this was accentuated by the outbreak of COVID-19. Economic slowdown, job losses and restrictions on store operations meant consumers became more cautious in opening their wallets to buy gold. According to a Reserve Bank of India (RBI) survey, the Consumer Confidence Index fell to a historic low of 63.7 in May from 85.6 in March, and the one-year ahead confidence index also recorded a sharp fall. Discretionary spending on gold jewellery was further quashed by local domestic gold prices – the average domestic price for Q2 was Rs46,381/10gm – 44% higher y-o-y.

Jewellers are adopting online channels to boost sales. The pandemic has disrupted the bricks and mortar business model of Indian gold retailers and has become a catalyst for retailers to adopt online channels to boost sales. While sales via digital channels are still nascent, jewellery retailers are increasingly implementing an omni-channel strategy integrating both offline and online channels to boost sales.


Gold jewellery demand in Turkey plummeted 69% in Q2, down to just 3t – the lowest quarter in our series. Jewellery retailers in lockdown, combined with record high local gold prices, put a virtual stop to demand in April and May. June’s reopening saw the release of some pent-up demand, but the rebound was short-lived as gold prices climbed again.

Severe losses across Middle Eastern markets resulted in a 69% drop in Q2 demand for the region, down to 13.6t. The UAE suffered the most drastic y-o-y decline, down 86% to 1.3t, as market lockdown eradicated tourist purchases, while domestic demand was quashed by high gold prices, job losses and the weak economic environment.

Demand in Iran continued to deteriorate as the rial lost further ground against the dollar and the pandemic added to the sanction-hit country’s economic challenges. A 66% y-o-y fall in Q2 demand fed through to a 40% H1 decline, to 10.2t.


Gold jewellery demand in the US broke down from its gradual uptrend over recent years, falling a hefty 34% y-o-y to 19.1t, the lowest quarter in our series. H1 demand was down 21% to an eight-year low of 41.9t. Store closures due to COVID-19 lockdowns were the clear reason for the decline, which was all the more severe for the fact that lockdown encompassed Easter and Mother’s Day, both of which traditionally see a marked increase in footfall to jewellery stores. Demand collapsed in April and May, before recovering in June as stores began to open up. The bounce back was also partly attributable to consumers spending government stimulus cheques on discretionary goods.

Similar to the shift seen in other markets, online retailing stepped in to compensate in part for the collapse in bricks and mortar sales.

Gold jewellery demand in Europe also fell to a new all-time low: Q2 was down 42% y-o-y at just 8.2t. This took the H1 total to 19t, down 29% y-o-y. Perhaps unsurprisingly, given the severity of the COVID-19 outbreak in both markets, Italy and the UK posted the most significant declines: both saw y-o-y falls of 45% in Q2.


The impact of COVID-19 and the consequent market lockdowns – together with surging gold prices – resulted in sweeping losses across the smaller East Asian markets. Indonesia and Thailand suffered the largest losses in Q2 and H1 as both markets grappled with the impact of the coronavirus pandemic on top of already slowing economies.

Demand in Japan – although weak – was less severely impacted than the rest of the region. A 40% y-o-y fall in Q2 to 2.5t took H1 demand down 27% to 5.6t. Quasi-investment demand for heavy gold chains benefited from the rising gold price.

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