Global demand for gold jewellery plummeted in the first quarter of 2022 on high gold prices and extended Covid-19 woes, erasing steady gains recorded throughout 2021.

In its latest report, Gold Demand Trends Q1 2022, the World Gold Council (WGC) said worldwide gold jewellery demand was down 7 per cent to 474 tonnes during the first three months of 2022 compared to the same period in 2021. 

High gold prices were partly to blame but market weakness in major markets China and India also contributed to lacklustre demand. The two countries together tend to generate between 55 per cent to 60 per cent of total quarterly jewellery consumption.

WGC data showed gold’s average quarterly price of US$1,877.2 per ounce was around 5 per cent higher than in the first quarter of last year.

“Much of the decline can be accounted for by China and India,” the report said. “Demand elsewhere was relatively robust, particularly in the Middle East and Europe. Excluding China and India, jewellery demand was 7 per cent higher year on year.”

China’s strong performance over the Lunar New Year period was dampened by Covid outbreaks in February and March, which resulted in strict lockdowns. The country continues to adhere to its zero-Covid policy. Its first-quarter gold jewellery demand was down 8 per cent to 178t.

India meanwhile saw a 26 per cent year-on-year decline in jewellery demand to 94t due to a lack of auspicious gold-buying occasions like weddings in the first quarter. This, coupled with rising gold prices globally, prompted many Indian consumers to hold back on their purchases, explained WGC.

Overall, jewellery fabrication was slightly more resilient, dipping 4 per cent year on year to 518t. As a result, the market saw a build-up of inventories during the quarter as consumer demand failed to match expectations. 

Jewellery demand has yet to return to pre-Covid volumes that were the norm in most markets, revealed WGC. “A comparison with 2019 levels reveals that, with a few exceptions, demand in the most recent quarter is weaker than that of Q1 2019 – most notably in India and the smaller markets in Asia. The market has yet to ‘normalise’ following the shock of the pandemic, and the subsequent rise in gold prices may slow its recovery,” it added.