Global demand for jewellery fell 46 per cent in the first half of the year, owing to business and travel restrictions coupled with soaring prices of gold, according to a latest report by the World Gold Council (WGC). 

Jewellery consumption in H1 plunged to a new year-on-year low of 572 tonnes for the council’s series, data from the Gold Demand Trends Q2 2020 showed. Despite the strengthening of gold prices over the period, demand in value terms dipped to US$30.1 billion, the lowest since 2009 when gold prices were roughly 50 per cent of recent levels.

According to WGC, gold prices have gained 17 per cent in US dollar terms over the first half.  As of August 5, prices reached US$2,048.15 per ounce, WGC data showed. 

Demand for jewellery in the second quarter also reached a record quarterly slump of 251 tonnes, down 53 per cent from a year ago due to the global economic slowdown.

“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,” the report said.

China and India were the biggest contributors to lacklustre demand in the first half, with China - having been the first to emerge from lockdown - seeing a slight quarter-on-quarter recovery from Q1.

China’s Q2 jewellery demand sank 33 per cent to 90.9 tonnes compared to last year, taking H1 levels to 152.2 tonnes – a 52 per cent year-on-year decline and the lowest since H1 2007.

The China Gold Association said gold demand continued to rebound as China started reopening markets and easing restrictions, further supported by rising online jewellery sales.

The WGC added that demand for bridal jewellery could be key to a recovery in China’s gold jewellery market in the second half of the year when postponed weddings are expected to happen. October and December are traditionally peak months for weddings so jewellers are expecting a surge in ceremonies. 

In India, jewellery demand plunged 74 per cent year on year to 44 tonnes – the lowest quarterly total in the council’s series by some margin – due to a nationwide lockdown, lack of demand during festivals and stronger gold price. H1 demand was down 60 per cent to an all-time low of 117.8 tonnes. 

“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,” the report said. “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.”