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Global Gold Jewelry Demand -9% in 1Q

May 14, 2015 3:27 AM   By Avi Krawitz
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RAPAPORT... Global gold jewelry demand fell 9 percent year on year to $23.53 billion in the first quarter of 2015, according to the World Gold Council (WGC). By volume, gold jewelry demand declined by 3 percent to 600.8 tonnes, the group's quarterly demand trends report noted.

Global gold demand, including jewelry, investment, technology and central bank orders fell 7 percent to $42.28 billion, while demand by volume declined 1 percent to 1,079.3 tonnes.

The WGC reported that weakness in China was offset by growth in gold jewelry demand from India, where it rose 22 percent to 150.8 tonnes, but the WGC added that the sharp increase was a reflection of unusual weakness in the market during the previous year. WGC did not publish separate country data for demand by value, however.  Jewelry demand in India during the first quarter of 2014 was restrained by import restrictions, the looming election and temporary constraints on the movement of cash and assets such as gold.

Conditions were more encouraging in the most recent quarter, the WGC stressed. Still, wholesale demand was muted in January and February, as there was some expectation that India  would reduce import duties on gold, the group explained. However, after the government left the gold duty untouched in its budget, imports doubled in March. At a consumer level, jewelry demand in India has steadied, following a volatile two-year period, WGC stated.

China’s gold jewelry demand by volume fell 10 percent to 213.2 tonnes, ranking as the largest market for the quarter. Slowing economic growth, rallying stock markets as investors shifted to equities over physical assets, and a cautious outlook for gold prices all weighed on jewelry demand. As a result, jewelry demand was relatively restrained during the Chinese New Year, which is traditionally a popular time for buying and gifting gold jewelry.

The WGC observed that China's anti-corruption campaign continues to restrain demand, although the main impact of the policy has already been felt and is likely to have less of an impact going forward.

The report noted that 18-karat gold, which has more of a design element that appeals to younger consumers and offers wholesalers and retailers better margins, has gained market share.

Other notable markets were Hong Kong, where demand fell 26 percent to 13.6 tonnes as inventory restocking was restrained due to the quiet Chinese New Year season, and retailers are shifted to lower-karat, higher-margin products. In Turkey, gold jewelry demand slumped 28 percent to 10.4 tonnes largely due to a sharp depreciation in the lira currency against the dollar, which drove gold prices in local currency to rise to near-record levels. U.S. demand rose 4 percent to 22.4 tonnes due to ongoing inventory replenishment and as consumers continued to express a preference for higher-karat jewelry, the WGC explained.

Overall, rising household wealth and economic growth provided support, but conservative consumer attitudes toward spending and a general lack of innovation in design continue to be potential headwinds, the report stated.


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Tags: Avi Krawitz, China, diamonds, gold, India, jewellery, Jewelry, Rapaport, WGC, World Gold Council
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