Pent-up demand alongside celebratory post-pandemic shopping fuelled strong sales of gold jewellery in China in the first quarter of 2023, revealed the World Gold Council (WGC).

According to WGC’s Gold Demand Trends Q1 2023, Chinese consumers purchased 198 tonnes of gold jewellery, up 11 per cent year on year and accounting for 41 per cent of total consumption for the quarter. This was also the highest Q1 performance for Chinese jewellery demand since 2015. 

Meanwhile, India, another major gold jewellery market, saw a 17 per cent decline to 78 tonnes in Q1 demand mainly due to volatile local gold prices. 

All in all, gold jewellery consumption in Q1 2023 remain almost unchanged at 478 tonnes from 475.3 tonnes during the same period in 2022. WGC said Q1 2023 figures were 5 per cent lower than the five-year quarterly average of 501 tonnes. 

WGC remarked, “China was the clear outperformer during the quarter, where consumers embarked on a relief-driven shopping spree. India saw a very different quarter, with demand quashed by record local gold prices.”

Strong comeback

WGC said Chinese consumers went on a hefty buying spree to celebrate the lifting of restrictive zero-Covid measures. A rebound in domestic economy further ignited demand as the country’s gross domestic product rose 4.5 per cent year on year in Q1. Demand for bridal jewellery likewise improved while many bought gold jewellery for investment.

Consumers mainly favoured hard but lightweight pure gold jewellery pieces for their style versatility and lower price points while culture-inspired gold jewellery continued to enjoy a strong following. 

“Looking ahead, we expect to see the usual seasonal dip in Q2 jewellery demand in China,” noted WGC. “And should very elevated local gold prices persist, they could hinder gold jewellery demand. An additional threat comes from the potential for consumers to allocate more of their budgets to travel and entertainment.”

Price volatility

India, on the other hand, recorded the weakest first quarter since 2020, according to WGC. Q1 gold jewellery sales were also down 65 per cent from an exceptionally strong Q4 2022.

Industry data showed gold prices hit a record high in early May this year to above INR61,000 (around US$744) per 10 grams. WGC said demand is likely to remain muted over the coming quarters. It explained, “Risks remain to the downside until we see evidence of healthy monsoon rainfall. Rural demand – a key source of gold jewellery demand – remains fragile and persistent inflation will likely continue to impact consumer sentiment.”

Historically high gold prices are also a growth deterrent amid early signs that consumers are starting to adjust to new prices. WGC said 18-karat gold jewellery continued to gain popularity during the quarter, particularly among younger, more budget-conscious consumers.