Global economic recovery coupled with improving market sentiment bolstered demand for gold jewellery in the second quarter of 2021 following pandemic-fuelled challenges, the World Gold Council (WGC) reported. 

Citing data from Gold Demand Trends Q2 2021, the council said demand rose 60 per cent year on year to 390.7 tonnes, with China and the US exhibiting substantial growth. Demand in the first half of 2021 meanwhile showed a 17 per cent decline from 2015 to 2019 H1 average figures.

“Despite this strong y-o-y growth, demand remains some way below its longer-term averages,” revealed WGC. “Comparisons with 2019 – which are arguably more meaningful given the anomaly of 2020 – show that demand remains significantly weaker: Q2 is 26 per cent lower than Q2 2019 while H1 is down 18 per cent.”

The impact of severe pandemic-induced disruptions in India on these numbers cannot be discounted, according to the report. 

Main markets

Improved domestic economy in China drove Q2 demand to 147 tonnes, up 62 per cent from the same period in 2020. The figure is also 8 per cent higher compared to Q2 2019. 

This brings China’s first-half gold jewellery demand to 338 tonnes, a 122 per cent jump year on year mainly due to a low base of comparison alongside a stronger local economy and various consumption incentives. Gold jewellery demand in Q2 2021 was the highest since 2015, noted WGC.   

Heritage gold jewellery continued to attract attention in the market while jewellery pieces falling under the so-called Guochao – a fashion trend heavily influenced by Chinese culture – are likewise gaining favour among younger buyers.

In India, Q2 demand for gold jewellery rose 25 per cent year on year against a muted base in 2020. Demand however plummeted 46 per cent quarter on quarter as a second wave of Covid-19 infections hit the country. 

WGC said it is maintaining a “mixed” outlook for the remainder of 2021, adding that India still faces a threat of a third wave of Covid-19 and lockdowns. “The lasting effects of the second wave on incomes and sentiment may diminish pent-up demand. There are, however, a greater number of auspicious wedding days in Q4 2021 compared with Q4 2020,” the report noted.

The US meanwhile was one of the strongest performing jewellery markets in Q2, with demand rising 103 per cent to 37.7 tonnes – its strongest for any Q2 since 2007. Demand was fuelled by improved sentiment due to the vaccination programme, government-led income support measures and stronger economic growth. 

“With the US consumers still limited in their ability to travel, disposable incomes were again diverted elsewhere and gold jewellery was a beneficiary of this shift,” WGC said.

Road ahead

According to WGC, jewellery demand could hover between 1,600 tonnes to 1,800 tonnes in 2021, well above 2020 levels but below the five-year average. Demand for gold jewellery should be supported by continued global economic recovery throughout the year, but Covid-related disruption in some markets such as India could be a challenge. 

"While pent-up demand could serve as a boost, a strong price recovery in H2 could push jewellery demand towards the lower end of the range," added the council.