Gold jewellery sales fell 6% year-on-year in Q1 2012
Despite challenging economic conditions and a 22% increase in the average price of gold year-on-year, jewellery demand fell by only 6% compared to Q1 2011, according to the World Gold Council’s (WGC) Q1 2012 Gold Demands Trend report.
Demand in the jewellery sector of 519.8 tonnes was down 6% year-on-year, largely in response to higher price levels. However, the WGC said that the fact that the quarterly average price was 22% higher suggests that demand for jewellery “remains relatively price inelastic”.
In US dollar terms, the value of jewellery demand grew by 14% to a record US$28.3bn. Weakness was concentrated in India, a number of Middle Eastern markets and Europe, while a number of markets, primarily China, Russia and Egypt generated growth.
In the UK, consumers reacted to the high gold price, reducing their demand for gold jewellery by 4% to 3.0 tonnes.
The WGC confirmed that high gold prices continued to negatively impact jewellery demand in western markets but a spokesperson said that the Council foresees demand growing in these markets as gold is “re-premiumised” with consumers seeking “fewer, better things” reinforcing gold’s value.
Jewellery demand in China also increased significantly to 156.6 tonnes, accounting for 30% of global jewellery demand, making China the largest jewellery market for he third consecutive quarter.
The first quarter of 2012 was an unprecedented period for India, with a number of market forces converging to dampen demand. Weaknesses in the Rupee resulted in elevated local prices while consumers were faced with a rise in import taxes on gold and the introduction of an excise duty on gold jewellery, which prompted jewellers country-wide to strike. However, in May the Government withdrew the new tax on jewellery and the market is already responding positively.