19% Decline In Gold Jewelry Demand

Higher prices for gold and market-specific difficulties led to a steep decline in gold jewelry demand for the first quarter of 2016, according to the World Gold Council. 

Global gold jewelry demand fell 19 percent, year-over-year, to 481.9 tons for the period (a four-year low) led by large declines in demand in India and China, the two largest gold markets, the WGC said in its quarterly “Gold Demand Trends” report.

But the decline in demand spread worldwide as a 122 percent increase in gold investment demand led to a surge in the price of the precious metal. The WGC attributed this increase in demand to a “swirling uncertainty" created by a "mix of factors" that "undermined confidence in traditional asset classes.” This included Negative Interest Rate Policies implemented by the central banks of Japan and Europe, China’s devaluation of the yuan fueling fears over the country’s economic health, and the expected slowing pace of interest rate rises in the U.S. 

This resulting increase in the price of the precious metal slowed jewelry making activity in much of the world. There were few bright spots. 

India’s jewelry manufacturing operations “virtually ground to a halt” in March due to “a combination of surging prices and industrial action in protest at government policy,” the WGC said. The protests erupted with the India’s government announced plans to impose a 1 percent excise tax on jewelry manufacturing. Jewelry stores throughout much of the country closed for the entire month of March and into April. 

The result was that first quarter gold jewelry demand fell 41 percent to 88.4 tons in India, a seven-year low. However the WGC added that it believes business will soon return to normal as most stores re-opened in the second half of April for the Akshaya Tritiya festival in early May and the start of the wedding season. 

Meanwhile, China saw a 17 percent decline in gold jewelry demand year-over-year to 179.4 tons due to “sharply rising gold price against a background of continued economic slowdown,” the WGC said.

The high price of gold took its toll in other Asian markets. Malaysia (-23%) and Indonesia (-10%) were the weakest performers. 

Vietnam was an exception to the depressed regional market, with jewelry demand 6 percent higher year-over-year. However, the WGC warned that at least some of this growth could be attributed to investment demand. 

The US proved to be one of the few bright spots in the world as demand for gold jewelry continues to grow. In the first quarter demand increased 2 percent year-over-year to 22.6 tons, marking the ninth consecutive quarter of year-over-year gains, “impressive for a market where economic growth has remained relatively anemic,” the WGC said. 

Some retailers were re-entering the gold jewelry market after slashing or completely eradicating their gold product offerings, WGC said. In addition, double digit gains in gold jewelry imports in January and February “was a clear indication of US consumers’ continued desire for gold jewelry.” 

The lone bright spot in the Middle East was Iran where gold jewelry demand rallied by 10 percent year-over-year to 9.9 tons as the market continues to feel the benefit of the lifting of Western sanctions. However, the WGC added that this growth was tempered by the impact of 9 percent VAT. 

The remaining Middle Eastern markets uniformly saw double-digit losses in the first quarter as the region is beset with low oil prices and weak tourism revenues, in addition to the high price of gold. Egypt was the worst casualty as demand fell 18 percent to 7.7 tons.

In Turkey, gold jewelry demand declined 18 percent to 8.5 tons as the high price of gold, a struggling domestic economy and terrorist activities weighed on sentiment, the WGC said.

In Europe, gold jewelry demand was lackluster with a 1 percent increase to 12.7 tons. 

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Gold Jewelry Demand Up 6% in Q3 As Gold Prices Fall

Consumers in much of the world increased spending on gold jewelry, making pieces by designers such as Alex Soldier more in demand

Global demand for gold jewelry grew 6 percent year-over-year in the third quarter of 2015 to reach 631.9 tons, marking the strongest third quarter for jewelry demand since 2008, according to the World Gold Council. 

Lower prices for gold in July and August attracted consumer to buy gold jewelry, according to “Gold Demand Trends” report for the third quarter of 2015. This is in strong contrast with a 14 percent decline in gold jewelry demand in the second quarter.

On a year-to-date basis, jewelry demand amounted to 1,750.2 tons, 3 percent behind the same period of last year.

In India, the drop in price of gold led to a dramatic turnaround in consumer demand for the world’s second-largest consumer of gold jewelry. Year-over-year demand for the third quarter increased 15 percent to 211.1 tons. This compares with a 23 percent decline in the second quarter of 2015.

“Between mid-July and mid-August, retailers saw unusually brisk trade for the time of year,” according to the report. “Traditionally, this period experiences a lull in demand in the pause between the end of the April-May wedding season and the onset of autumn festivities, particularly by Diwali. The surge in demand ended after mid-August with a sharp recovery in the price of gold, exacerbated by a weakening of the rupee.”

Rural and semi-urban consumers were the main engine of growth in the Indian jewelry sector, according to the report.

However, the report warns that the “fourth quarter outlook is more muted.”

In China, the world’s largest gold jewelry market, lower prices and strong Valentine’s Day sales lifted consumer consumption in the third quarter as gold jewelry demand grew a modest 4 percent, year-over-year, to 187.6 tons. In line with global patterns, consumers responded favorably to the sharp drop in the price in July. The drop in price coincided with China’s Valentine’s Day on August 20.

Again, the WGC warns that there may be trouble ahead for the gold jewelry demand in the fourth quarter.

“The jewelry sector in China faces headwinds from a number of quarters. Credit conditions remain tight and competition fierce. 18k jewelry continues gradually to encroach on the market for 24k, in part due to manufacturers pushing more contemporary, highly designed product in order to gain market share.

“Expectations for the fourth quarter are somewhat more conservative, bearing in mind the weakening macro picture.”

Meanwhile, jewelry demand in Hong Kong grew by 22 percent to 13.7 tons, primarily due to higher-design, unique pieces, popular with mainland Chinese tourists.

In the US, jewelry demand continues to make “creeping gains,” the WGC says in its report. Demand grew by 2 percent to 26.2 tons.

“Growth in the sector reflected a continued desire for gold in the 10k and 14k sectors, against a hesitant economic recovery,” according to the report. “However, imports again outpaced demand, as the retail sector shored up inventories in anticipation of further strength in demand as the holiday season approaches.”

Other markets are as follows:

* East Asia - Jewelry demand made double-digit gains in Indonesia, South Korea and Vietnam, assisted by the falling price, WGC said. Indonesian demand was further boosted by an economic stimulus package unveiled by the government in early September. In Vietnam, economic growth and a relatively benign inflation environment also contributed to the upturn. Meanwhile, jewelry demand in Singapore and Malaysia declined by 24 percent and 10 percent, respectively. Year-on-year comparisons in Malaysia were negatively affected by the Goods and Services Tax, introduced in April.

* Turkey - Demand fell 29 percent year-over-year to 12.1 tons, the lowest third quarter ever, according to WGC records. “Political instability and the rising threat of terrorist attacks have had a devastating impact on consumer sentiment. Those wishing to seek respite from the turmoil in gold did so through investment products: bar and coin demand was contrastingly positive, up 97 percent year-on-year.”

* Middle East - Demand for gold jewelry varied as minor gains in Saudi Arabia and Egypt cancelled out slight declines in Kuwait, United Arab Emirates and the other Gulf countries, WGC said. “Lower oil prices and regional political tension tussled with the fall in gold prices to keep demand broadly stable.” The exception was Iran, where jewelry demand rallied by 40 percent to almost two-year highs. “Consumer sentiment was boosted by the signing of the nuclear deal, an affect which was further magnified by the tumbling gold price, although the 9 percent VAT rate introduced in Q2 was something of a headwind.”

Gold jewelry demand in Europe fell 1 percent as demand was stagnant across most markets, according to the report. Exceptions were France where gold jewelry demand declined 6 percent and Spain where demand grew 5 percent.

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10% Drop in 2014 Global Gold Jewelry Demand

This Indian woman who reportedly wore more than $600,000 worth of jewelry to her wedding may have helped India achieve an 8 percent gain in gold jewelry demand in 2014

Global gold jewelry demand fell 10 percent year-over-year in 2014 to nearly 2,153 tons as strong growth in India, the US and UK couldn’t offset declines in many other large gold markets, the World Gold Council said Thursday.

The WGC, in its quarterly Gold Demand Trends report for the fourth quarter and year-end 2014, says the decline was largely due to extremely strong comparisons to 2013. 

“2014 was always going to be a difficult year for jewelry demand, contending with comparisons to phenomenal strength in 2013,” WGC said in the report. “After a steep drop in Q2, demand for gold jewelry gradually recovered, culminating in the strongest Q4 since 2007.”

The report also notes that the year-end figure is “comfortably above” the 2,053 ton average for the the prior five-years. 

Despite the drop for 2014, year-over-year fourth quarter demand actually grew by 1 percent to 575 tons, again led by a surge in year-end demand in India, the US and the UK, according to the report. 

The report, which also tracks gold demand for technology, investment and central bank net purchases, says jewelry remains the biggest source of demand for gold, accounting for nearly 55 percent of total demand in 2014. 

Declines were reported in much of the world including nearly all of Asia, the Middle East, Russia and in gold manufacturing centers Turkey and Italy. 

The biggest surge in demand for 2014, by far, was in India—one of the two largest gold markets in the world. India had its strongest year for jewelry demand since the WGC began tracking demand in 1995, up 8 percent year-over-year to 662 tons. Wedding- and festival-related purchases drove fourth quarter demand up 19 percent and first-half 2014 up 37 percent, year-over-year. “The second half of the year was the strongest H2 in our data series (from 2000),” the WGC said in its report.

However, it should be noted that the results in India are being compared with extremely weak 2013 results, due to restrictions of gold imports and the decline in value of the local currency in 2013. 

The other largest gold jewelry market in the world, China, saw its 2014 demand fall by 33 percent year over year to 623.5 tons. Despite this, it was still the second best year for jewelry demand in the country since WGC records began. 

In the US, jewelry demand showed year-over-year growth for the seventh consecutive quarter. Its fourth quarter result of 54 tons was a 13 percent year-over-year increase and the strongest fourth quarter since 2009. The 2014 full year demand of 132.4 tons was a 9 percent year-over-year increase and the highest year-end total in five years. 

“That being said, it clearly has to be acknowledged that the market remains far below pre-crisis levels of jewelry demand, which between 2000 and 2006 averaged 360 tons per year,” WGC added.

In the UK, demand increased by 18 percent in 2014 to 27.6 tons. In the fourth quarter sales increased by 14 percent to 15.9 tons, led by the introduction of “Black Friday” sales events for the Christmas holiday season, the WGC said. 

“Lower carat gold jewelry took market share from silver and some interest in heavyweight plain gold chains was reported,” WGC said. 

In most other major gold jewelry markets, demand was down. 

The Asian region was generally weak, with smaller markets “affected by its own individual set of adverse economic circumstances that proved detrimental to jewelry demand,” WGC said in its report. Japanese demand for jewelry slid 8 percent in 2014 to an all-time low of 16.3 tons as the already ailing consumer sentiment “was dealt a blow by the sharp fall in the value of the yen after the central bank unexpectedly expanded its monetary stimulus program in the last quarter.” 

There was a 12 percent decline in demand in Indonesia, the largest of the non-Chinese Asian markets, due high inflation and political upheaval. Newly elected President Widodo announced the removal of gas subsidies in October, “which further choked disposal income.”

Vietnam bucked the trend with a 4 percent gain in 2014.

Other markets are as follows:

* Turkey, demand was down 7 percent to 68.2 tons. 

* Middle East, markets in this region lost a combined total of 8 percent in 2014 to 174.1 tons.

* Russia, gold jewelry demand in Russia dropped sharply in the fourth quarter, leading to a net decline of 4 percent to 70.6 tons for 2014. “The stratospheric rise in the gold price during the fourth quarter (as sanctions and sliding oil prices hit the domestic currency) proved too steep for many consumers.”

WGC says that Jewelry is by far the largest component of above-ground stocks of gold—accounting for almost half of the 177,200 tons of gold estimated to be held by private owners and central banks. 

The total global gold market in 2014 declined 4 percent to 3,923.7 tons, according to the report. The total global supply of gold was flat at 4,278.2 tons. 

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Q3 Global Gold Jewelry Demand Down 4%, US Demand Up 4%; India Demand Surges 60%

Global gold jewelry demand fell 4 percent year-over-year to 534.2 tons for the third quarter of 2014, according to the World Gold Council in its Gold Demand trend report released Thursday. However, the decline comes against an unusually robust third quarter of 2013, which experienced the strongest growth for jewelry demand since 2008. 

“Longer term analysis shows a market in good health. Q3 demand was marginally stronger than the five-year quarterly average of 527.6 tons, while year-to-date volumes continue to extend the broad uptrend from the low seen in 2009,” the WGC said in its report.

Two markets did shine, the US, with a 4 percent rise that helped lift manufacturing outputs in several gold jewelry producing countries; and India, which surged 60 percent. China and Hong Kong, meanwhile, experienced steep declines in gold jewelry demand. 

US ‘Revival’
The WGC’s report said the economic recovery and a downward trend in the price of gold created a “revival” of gold jewelry demand in the US that has had a “ripple effect” around the world.

“The US sucked in greater volumes of gold jewelry imports from markets as diverse as India, China, Italy, Mexico and Oman, according to the report. “Third quarter growth in the US market was very much an extension of the trend that has prevailed since early last year. Mounting conviction in the economic recovery has boosted sentiment and whetted consumers’ appetite for discretionary purchases. Gold jewelry has been a clear beneficiary: improving sales of higher carat and non-wedding related items helped demand to the highest Q3 total since 2009.”

The report added, “Lower gold prices have aided the recovery of US demand as retailers are more easily able to meet key price points without crimping margins. Or, similarly, to increase karatage while maintaining price levels. This has enticed some mass- market retailers back into the gold jewelry sector.”

India
The market that had the strongest third quarter by far was India, which reported a 60 percent year-over-year increase to nearly 183 tons—the second highest third quarter on record, the WGC said. 

“The third quarter of 2013 was decidedly weak as the introduction of complicated new measures to restrict gold imports and the subsequent sharp rise in local prices knocked demand,” the WGC said in its report. “But this quarter, other more positive forces were also at play.”

Among those forces is the confidence in the new Indian government led by Prime Minister Narendra Modi, a drop in the price of gold and robust buying during the Diwali festival season. 

“Although Indian consumers are typically wary of buying gold while the price is still moving, preferring to wait until it settles at a more stable level, the opportunity to buy at cheaper prices proved, for some, hard to resist.”

China
Meanwhile, China experienced a 39 percent year-over-year decline to 147.1 tons in gold jewelry demand. Hong Kong (where consumers from the mainland China account for most of the demand) fell 31 percent to 9 tons. The WGC said much of this decline is in comparison to the rapid expansion throughout 2013 and that gold jewelry sales are normalizing.

“18-karat (K-gold) jewelry was relatively more robust than the 24-karat (chuk kam) segment,” the WGC said. “The government’s anti-corruption drive may have contributed to this trend.”

Other Markets:
* Indonesia saw third quarter demand fall 16 percent to 9.7 tons partially in response to strength of demand last year. However, the WGC said “equally important was the Presidential election in July, which created a degree of political instability and discouraged spending on gold jewelry.” 

* Third quarter jewelry demand in Turkey fell 18 percent, year-over-year, to 19.2 tons—the lowest third quarter on record, the WGC said. “Consumers were unnerved by domestic political turmoil; worrying economic signals; and escalating Syrian violence in close proximity to the Turkish border. The ban on paying for gold jewelry by credit card installments continued to hang over the market, although this restriction was partially repealed in October.”

* Demand in the Middle East fell 14 percent year-over-year to 36 tons. Demand for gold jewelry across the region suffered from the comparison with strong demand last year, the WGC said, leading to a trend towards lower-karat and gem-set jewelry.

* Jewelry demand in the UK increased 18 percent to 4.6 tons, the fifth consecutive year-over-year rise.

* Gold jewelry demand in Russia edged up 1 percent year-over-year to 18.6 tons, despite a rise in the average domestic gold price due to a weaker rouble, the WGC said. 

* Demand in Italy fell 4 percent year-over-year to 2.7 tons. 

The Gold Demand Trends report also tracks gold for investment and technology purposes. In the third quarter overall demand was “subdued,’ the WGC said, falling by 2 percent to 929.3 tons. The price was relatively stable for the period. 

“Quarterly volatility in the US$ gold price was among the lowest levels seen over the past two decades,” WGC said. “This was both a cause and effect of the benign demand environment. Investor behavior in particular contributed to this circularity: the lack of a clear price signal caused investors to hold back from buying gold, which in turn dampened down price moves.”

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Global Gold Jewelry demand Fell 30% While Sales in the US and UK Improve

Yellow and white gold bracelets by Italian jewelry brand, Antonini. There was increase in Italian gold jewelry exports for the second quarter of 2014. 

Plummeting gold jewelry sales in India and China led to a 30 percent year-over-year drop in gold jewelry demand for the second quarter of 2014, the World Gold Council said Thursday. The loss was slightly offset by increases in consumer demand in the US and UK. 

Gold jewelry demand fell to 509.6 tons in the second quarter of 2014 compared with 726.7 tons in the same period of 2012, the WGC said in its quarterly report, “Gold Demand Trends.” Officials for the gold industry market development organization said the decline was expected due to the strength of 2013 demand and a natural annual weak period for such demand. In addition, the organization (which also tracks gold demand in investment, among central banks and for technology uses) notes that jewelry demand historically has accounted for more than half of global gold demand and the second quarter of 2014 was no different at 53 percent. 

“In what is traditionally a quiet quarter for gold jewelry demand, Q2 2014, was unsurprisingly lower,” said Marcus Grubb, WGC managing director of Investment Strategy, said in a video addressing the report. “However, jewelry has been extending its broad upward trend from the base established in the depths of the financial crisis in early 2009.”

Nearly all Asian and Middle-Eastern countries experienced double digit declines in demand, while western markets either remained flat or fared better, according to the report. The exception is Italy, where consumer demand was down 8 percent. However, the country, known as a gold jewelry manufacturing hub, saw gold jewelry exports improve due to increased demand in the US and other key markets.

This decline in gold jewelry demand helped to influence a 16 percent drop in overall gold demand (investment, central banks and technology) to 963.8 tons, which the WGC described as “not surprising … given the stark contrast in conditions in the global gold market between the two time periods.” 

Grubb added, “Global gold market continues to recalibrate in 2014 following an exceptional 2013 for gold buying.” 

By country, China was the market most affected by the comparison with the second quarter of 2013, WGC said. Gold jewelry demand fell 45 percent to 143.4 tons. Hong Kong also experienced a similar decline (52 percent to 9.1 tons) due to a drop in mainland China consumers.

“The second quarter began as the first had ended, with consumers adopting a more cautious, considered and ‘occasion driven’ approach to gold jewelry buying,” according to the report. 

Grubb added, “Price sensitive consumers … held back from purchasing more due to uncertainty around the future direction of the gold price and the fact that purchases have been made in 2013 instead.” 

In India, jewelry demand fell by 18 percent to 154.5 tons. The WGC said holiday and wedding purchases remained steady but the drop was primarily because of the recent general election that culminated in the victory of Narendra Damodardas Modi who took office as India’s 15th prime minister in May. High value purchases were restricted by the previous government in the run up to the election, the WGC explained. Now consumers are waiting to see whether Modi will remove those restrictions.

“Consumers held back from buying on the expectation that restrictions on gold would be relaxed by the new government,” Grubb said. “No substantial changes have been made by the Indian government to date.”

In the Middle East gold demand saw a 25 percent decline to 47 tons. The WGC says the escalation of violence in Iraq had a “deleterious impact” on demand across the region. In addition, demand slowed ahead of Ramadan. “Nevertheless, the region as a whole remains relatively healthy, particularly as non-resident Indians provide a steady source of demand for the 22k segment.” 

While the east and Middle East markets are in decline, western markets are continuing to rebound from the 2008-09 recession, with the most notable increases in the US and UK. 

Gold jewelry demand in the US for the second quarter increased 15 percent to 26.1 tons as the country is taking in more imports from India, China and Italy. It was the country’s fifth consecutive quarter of year-over-year growth. In the UK, demand increased 21 percent to 3.6 tons. 

Gold jewelry demand in other key markets is as follows:

* In Turkey, demand fell 20 percent year-over-year due to a clampdown on credit card purchases and ongoing political turmoil, WGC said. The lower end market took the brunt of the decline while larger, more established brands were “relatively resilient.” 

* Thailand experienced a 60 percent decline in demand due to recent political instability and high comparisons to the second quarter of 2013, the WGC said.

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2013 Gold Jewelry Demand Up 17%

Marco Bicego 18k gold bracelet

Gold jewelry demand in 2013 saw the largest volume increase in 16 years as consumers across the globe reacted to lower gold prices, the World Gold Council said Tuesday. Full year demand was 2,209.5 tons, 17 percent above 2012 levels.

In addition, the fourth quarter of 2013 was the sixth consecutive quarter of year-over-year growth with demand of 553.8 tons, 12 percent above the five-year quarterly average, the WGC said in its market report, Gold Demand Trends: Full year 2013 Review. Jewelry consumption saw continuous growth throughout 2013, with the bulk of the increase coming in the first half of the year due to China and other Asian countries whose consumers responded quickly when the price first dropped. However, even during the second half of the year, the volume of demand continued, increasing by 7 percent year-over-year.

Also in the fourth quarter, the US and the UK generated a combined 14 tons of this growth. “Although the fourth quarter is traditionally strongest in these markets, due to the Christmas effect, these numbers are significant given their size and direction – the first year-on-year increase in Q4 demand in both markets since 2001,” WGC said in its report.

In addition to jewelry, the WGC report measures gold consumption in technology, investment and central bank purchases. The value of overall annual jewelry demand fell 28 percent in 2013 from its record highs a year earlier. However, in terms of jewelry demand, the value fell less than 2 percent, showing its strength in volume terms. 

New gold jewelry consumption records were set in India, China and Turkey in 2013. Even Japan, with its struggling economy recorded the highest value for the precious metal since 2008.  

“A longer term perspective shows that an increasing share of global collective wealth has been allocated to gold jewelry since 2003 (with the exception of 2009, during the worst of
the financial crisis),” the WGC said in its report. “In 2013, gold jewelry value was almost 0.14 percent of global GDP compared with less than 0.08 percent ten years previously. Significantly, jewelry share of global GDP in 2013 was one fifth higher than 1997, which was the
peak year for gold jewelry demand in tonnage.”

The year 2013 was also notable because of the increasing preference for higher-karat jewelry, particularly in China (24k jewelry). “This trend became more entrenched as the year progressed, benefitting from the quasi-investment element to jewelry purchases, particularly as the upsurge in demand in Q2 and Q3 led to a shortage of retail investment products.”

In the US, where the top end segment has been relatively robust, this trend was more noticeable at the lower end of the market, with mass retail brands shifting away from ultra-low carat items to increasing their stock of 14k jewelry.

Fourth Quarter Jewelry Trends
“Fourth quarter jewelry demand across eastern markets was likely tempered by the magnitude of buying in previous quarters, which on account of falling prices, had ‘cannibalized’ a proportion of future demand,” the WGC said. “In addition, expectations that prices had stabilized released the pressure on consumers who no longer felt they had to make purchases immediately to take advantage of lower prices.”

India - Fourth quarter jewelry demand fell 2 percent year-over-year to 150.7 tons. “The second half of the year was considerably weaker than the exceptional first half, equating to a robust full year total for the sector.”

China and Hong Kong – The WGC is calling the fourth quarter a slowdown from the record numbers during the first half of the year (with the exception of December leading to Chinese New Year), but demand still increased 10 percent to 150.7 tons for Mainland China for the period. In Hong Kong the growth was even greater at 17 percent to 7.9 tons.

Other Asian Markets – China’s pattern was replicated across the other Asian and Middle Eastern markets with strong demand during the first half of the year, tapering off in October as the drop in gold prices stabilized with growth in December. Fourth quarter results are as follows: Taiwan up 2 percent; Indonesia, up 28 percent; South Korea down 7 percent; Thailand up 17 percent; and Vietnam up 9 percent. 

Turkey – The gold jewelry manufacturing center also saw a similar pattern of demand but for different reasons, the WGC said. A strike at the mint between July and September led to a shortage of coins in the market, leading consumers to stock up on gold jewelry. However, once the strike was settled in the fourth quarter consumers went back to gold coins, at the expense of jewelry.

Japan – Its 11 percent growth in the fourth quarter was the exception to the regional trend of strong start and weaker finish to 2013, the WGC said. This was because of encouraging economic news and the anticipation of a sales tax increase from 5 to 8 percent in April, leading consumers to make pre-emptive purchases, where possible, to avoid paying the higher rate.

US and UK – Demand among US and UK consumers led to fourth quarter growth at 21 and 26 percent respectively. As mentioned previously, gold jewelry sales accelerated in the latter months of the year. 

Italy – Demand in this jewelry manufacturing center continued its downward trend falling by 10 percent in the fourth quarter. 

Russia – Jewelry demand reached a five-year high in the fourth quarter (up 6 percent), fueled by continued expansion of the middle class, with growth being concentrated in the second half of the year. 

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5% Increase in Q3 Gold Jewelry Demand

Gold jewelry demand for the third quarter of 2013 increased 5 percent year-over-year to 486.7 tons, the World Gold Council said Thursday, marking the best third quarter performance for the precious metal since 2010. 

In terms of value, gold being used for jewelry for the period fell by 15 percent year-over-year, due to a drop in the trading price of the precious metal, according to the WGC’s Gold Demand Trends report for the third quarter of 2013. Demand for the period was worth $20.8 billion, the lowest quarterly value since the third quarter of 2010.

Global growth for the period was led by high-karat gold jewelry purchases in Asia, the Middle East and the US, 

“An almost universal phenomenon in the third quarter was the increasing popularity of higher carat jewelry,” the WGC said in its report. “Across Asia, the Middle East and in the US, higher carat jewelry was noted as an area of particular growth as the increased investment properties associated with gold of higher purity came to the fore. The fact that jewelry retailers in a number of markets were increasingly stocking investment products (small bars and coins) provided further evidence of the greater blurring of the jewelry/investment distinction.”

Consumers in China generated 163.7 tons of jewelry demand in the third quarter, making it by far the largest single jewelry market. The country’s year-to-date, demand of 518 tons already equals the same amount for the full-year 2012.

“To some extent, exhaustion set in towards the end of Q3 after such a frenetic second quarter, but continued expansion of the retail network confirms that the trade sees prospects for growth,” the WGC said.

Increases were reported in 24k jewelry (known as “chuk kam”), which has a purity rating of 95.95 percent and in “four nines” gold (gold jewelry of 99.99% purity, compared with the typical 24-carat purity of 99.95%). The WGC explained that the former is unique to China and is most popular with consumers in lower tier markets and rural areas as an investment hedge.

Mainland Chinese consumers also attributed to a 28 percent increase in gold jewelry consumption in Hong Kong to 7.5 tons.

In the US, the WGC noted that “demand was a key development.” Gold jewelry demand for the third quarter rose 14 percent year-over-year to 43.4 million tons.

With the exception of fourth quarter demand (driven by holiday sales), the third quarter was the first quarter in four years in which gross jewelry demand exceeded recycling—creating net positive jewelry demand,” the WGC said. “Since Q3 2009, gross new quarterly jewelry demand had been exceeded by the recycling of old gold jewelry as distress selling took off during the economic downturn,” WGC said. “Increasingly positive sentiment among US consumers during the third quarter reversed this trend.”

The report also notes a shift towards 18k jewelry from 14k.

“Given recent developments in the US, consumer sentiment has taken a hit early in the fourth quarter, but the seasonal impact, together with prices holding below US$1,400/oz, suggests a certain amount of resilience,” the WGC said.

India, one of the world’s largest markets for gold jewelry, saw demand drop by 23 percent year-over-year to 104.7 tons due to import restrictions imposed by the government. “Demand for gold jewelry among Indian consumers remains strong, but reduced supply has prevented this demand from being fully realized,” the WGC said.

"The smaller Asian markets had robust growth for the period, with the exception of South Korea where weak consumer sentiment and a sluggish domestic economy dampened demand," the WGC said. "Across the rest of the region, there was a trend for higher karat jewelry pieces of relatively simple design as consumers across the region took advantage of gold’s increased affordability."

Gold jewelry demand in the Middle East increased 9 percent to 51.2 million tons, due to lower prices across the region, the WGC said. The “unsurprising” exception was Egypt.

“The emphasis on 22-karat gold at the expense of 21- and 18-carat diamond-set jewelry suggests demand was stronger among domestic consumers relative to western tourists.”

The third quarter in Turkey, which is traditionally strong, saw year-over-year demand increase 14 percent. In value terms, demand was virtually flat, due to a 12 percent decline in the local currency price of the precious metal.

Russia’s growing middle class, armed with greater disposable income, helped generate a 7 percent year-over-year growth in jewelry demand.

“European markets were again the exceptions to the more positive global picture, with both UK (-14%) and Italy (-7%) posting year-over-year declines due to “economic concerns,” WGC said.

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Gold Jewelry Is Back as Global Demand Surges to 5-Year High

18k Picasso Gold brooch, Tiffany & Co.

Demand for gold jewelry in the second quarter surged to its highest level in five years due to a sharp drop in the price of the precious metal, the World Gold Council said Thursday.

Gold jewelry demand by volume increased 37 percent to 575.5 tons, according to the WGC’s Gold Demand Trend report for the second quarter of 2013. The demand for gold was so great that it far outweighed a decline in the average gold price as the demand in terms of value rose 20 percent to nearly $26.2 billion, the fourth highest on record.

The price of gold for the second quarter fell by more than $400 an ounce or 12 percent, according to the WGC, the marketing development organization for the gold industry.

“Although jewelry demand is influenced by a wide set of factors, including economic growth, consumer sentiment and disposable income, to name a few, all were eclipsed by the effect of the drop in the gold price,” the WGC said in its report.

The upward trend was “almost universal,” the WGC said, with the most notable year-over-year improvements in India, China, the Middle East and smaller Asian countries. Demand included an increase of higher-carat jewelry. Europe was the only region where jewelry demand failed to rise.

The US reported its second consecutive quarter of growth. Demand remained the healthiest at the higher end of the market, however, the WGC noted that the middle market is beginning to shift from lower- to higher-carat gold. The WGC also said the lower prices provided an opportunity for wholesalers to stock early for the Christmas holiday season.

India and China, again, generated the largest volume increase—almost 120 tons of the 155-ton increase in demand was from these two countries, according to the report. Hong Kong generated the strongest percentage growth in demand (approximately 65%), surging to a record 12.1 tons. In fact, double-digit growth was commonplace throughout the Asian markets, with the exception of Japan, which was unchanged. In Indonesia, demand of 7.8 tons was the strongest second quarter since Q2 2009.

In Turkey, a gold jewelry manufacturing center, demand hit a record high in terms of local currency value, led by consumer bargain hunting (concentrated in 22k market for investment) and trade inventory building. Growth across the Middle Eastern region was almost purely price-related, the WGC said.

The improvement in the US market was not replicated in the western European market, “where negative economic conditions overwhelmed the positive impact of lower prices,” the WGC said. In Italy, another major jewelry manufacturing center, demand fell by nearly 10 percent and in the UK demand dropped by more than 20 percent.

Jewelry demand in Russia “continued to normalize towards pre-crisis levels,” the report states, with demand concentrated on the high and low ends of the market.

The Gold Demand Trends report also tracks demand in gold for investment and technology purposes. In the second quarter, overall gold demand fell by 12 percent to 856.3 tons due to the drastic drop in the price of the precious metal. This translated to a 23 percent drop in value to $39 billion—its lowest level in more than five years.

“Record quarterly investment in gold bars and coins was countered by sizeable outflows from ETFs as western investors reacted to a seemingly more positive outlook for the US economy and an eventual tapering of quantitative easing,” the WGC said.

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Gold, Diamonds and Crystals Glitter, Sparkle, and Shine at Las Vegas Jewelry Week

The World Gold Council's LoveGold exhibit at Couture.

Not everything was for sale at the jewelry shows in Las Vegas this past week although I suppose someone could have purchased the 27-pound gold bar valued at more than $500,000 from the LoveGold Exhibit at the Couture jewelry show.

Gold jewelry from Couture Show jewelry exhibitors.

Up on a stage above the tradeshow exhibitors at Wynn Las Vegas, the World Gold Council’s exhibition included art creations, curated gold jewelry used at red carpet events and selected gold pieces from the vendors at the tradeshow. LoveGold is the fashion jewelry initiative of the WGC, the marketing development organization of the gold industry.

One of the gold fashion displays at the LoveGold exhibit.

Many of the pieces were from the catwalk at Cannes where they were part of a special fashion show that was curated by Carine Roitfeld, the former editor-in-chief of Vogue Paris, to benefit amfAR, the foundation for AIDS research.

“We want to showcase the best that gold can be regardless of origin or price point,” said Sally Morrison of the World Gold Council. “The exhibition at Couture was a way of introducing the beginning of this activity to the brands and press at the show.”

A display at the "Diamonds with a Story" Rio Tinto Diamonds exhibition that highlights diamond origins.

As previously noted, Rio Tinto Diamonds presented an exhibition at the JCK Luxury and JCK Las Vegas tradeshows titled “Diamonds with a Story.” It featured jewelry created for the US market by eight North American designers based on the following four topics: “Origin,” “Cutting Impact,” “Mixed Medium” and “Color My World.” The designers created their works using Rio Tinto's colored diamonds from its Argyle mine in Australia and white diamonds from its Diavik mine in Northwestern Canada.

Varieties of Rio Tinto diamonds.

The exhibit is part of a marketing program by the mining company for the jewelry trade based on its own consumer research. The jewelry collections based on the four stories identify consumers' desire for the following attributes:

• Identifying the place of origin of the diamond they buy;
• Knowing that their diamond purchase is having a positive impact;
• Differentiating designs and concepts; and
• Access to natural colored diamonds

“We are excited by how well the 'Diamonds with a Story' platform is resonating," said Rebecca Foerster, manager of Rio Tinto Diamonds US Representative Office. “This appetite for innovation is good news for miners, manufacturers, retailers and ultimately the consumer.”

Elaborate and colorful jewelry design by David Mandel, part of the Swarovski Elements exhibit at JCL Las Vegas.

Swarovski Elements, the premium brand division of the world-renowned crystal company, Swarovski, provided a fashion-forward jewelry exhibition at JCK Las Vegas called “World Jewelry Facets,” featuring collaborations with designers and artists representing several mediums who created colorful designs using Swarovski crystal.

A necklace by Tim Hosier and Brian Thorson.

The creations ranged from elaborate, fanciful designs to more wearable pieces. Designers included Tim Hosier and Brian Thorson, known for their home accessories designs, to entertainment industry designer David Mandel.

Jewelry by American artists at the Swarovski Elements exhibit

There is also a charitable element with designs created by Senhoa, a non-profit organization and fashion brand that produces jewelry made by survivors of human trafficking. The Senhoa line on display was designed by Canadian model, Coco Rocha, and handcrafted by survivors of exploitation in Cambodia.

Jewelry by the non-profit organization and fashion brand, Senhoa, handcrafted by survivors of exploitation in Cambodia,

 
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U.S. Sees First Increase in Gold Jewelry Demand in 7 Years

Gold jewelry making a comeback.

Gold jewelry demand in the U.S. for the first quarter of 2013 grew by more than 5% year-over-year to reach a value of $986 million. This is the first increase in demand since the third quarter of 2005, the World Gold Council said Thursday.

The lower-end of the U.S. jewelry market rebounded considerably, the WGC in its quarterly Gold Demand Trends report, adding that it’s “a further positive sign of recovery in the U.S. economy, coinciding with a correction in the gold price over the course of the quarter.”

Meanwhile, the amount of gold used for the fabrication of jewelry worldwide increased by 12% year-over-year to 551 metric tons for the first quarter of 2013, worth a record value of $28.9 billion, according to the report.

The dramatic decline in the value of gold has led to an increase in demand, the WGC said in the report. However, that demand is largely limited to India and China, who continue to distance themselves from the rest of the world in their passion for gold jewelry. The two countries combined now account for 62% of gold jewelry demand, according to the report. The U.S. for the first time in more seven years saw a year-over-year increase in gold jewelry demand.

Other highlights of the report include:

* Gold jewelry demand surged by 19% in China to a record level, led by Chinese New Year gifting in January and a rebound in consumer sentiment, WGC said. This is despite new in leadership in China calling for less conspicuous consumption. Demand saw the largest increase in 24k gold jewelry, although demand for 18k gold jewelry also increased.

* In India, year-over-year demand grew by 15% and came just short of beating the fourth quarter 2012 record. However, that gain was compared a very soft first quarter of 2012.

* Meanwhile, gold jewelry demand in Italy and the U.K. fell dramatically, 12% and 7%, respectively, as difficult economic continues continue to lead consumers to purchase lower-karat gold and silver jewelry.

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Global Gold Jewelry Demand Shows Signs of Life Thanks to India

Gold for jewelry fabrication measured by value saw a 13 percent increase during the fourth quarter of 2012, primarily due to robust demand in India, according to the World Gold Council. It was strongest quarter for global jewelry demand since the first quarter of 2011 and may signal signs of strength after years of sluggish consumer demand.

In 2012, gold demand for jewelry saw a 3 percent rise in terms of value to $102.4 billion, year-over-year, “as consumers continued to allocate greater sums to gold jewelry, despite the 6 percent year-on-year rise in the price,” according to the WGC in its quarterly Gold Demand Trends report for the full year of 2012.

However, don’t open those champagne bottles just yet. In terms of volume, gold jewelry demand fell 3 percent in 2012 to 1,908 tons.

India, the world’s largest gold jewelry market and the world’s largest gold market, had by far the largest increase in gold jewelry demand. By volume the increase was 35 percent to 153 tons and by value it was 37 percent to $8.47 billion, according to Gold Demand Trends, released Thursday.

Gold jewelry, particularly in the economically struggling Western markets, has been a difficult sell since at least 2008 because investor demand caused the price of the precious metal to skyrocket. Outside of India and China, by far the two largest gold jewelry markets (and to a lesser extent the global luxury sector), there is really no indication that gold jewelry’s sluggish performance will change soon in most regions of the world.

Even in China (the world’s second largest gold jewelry market), 2012 was a year where gold jewelry demand was largely flat. In terms of volume the increase was 1 percent to 145.8 tons. In value, demand rose by 3 percent to $8.03 billion. India too had several serious economic issues during the first half of the year (including high import duties, market turmoil and a local spike in the price of gold) that resulted in a reduction for gold jewelry. The second half of the year saw a “strong revival” in gold jewelry leading to the exceptionally strong fourth quarter.

The WGC report also noted “a further erosion of tonnage in the Western markets,” again caused by the high price of the precious metal. Italy, which has one of the largest gold jewelry manufacturing centers in the world, saw demand by tonnage decline by 15 percent in 2012.

In the U.S., jewelry demand in 2012 fell 6 percent by volume to 108.4 tons and fell 2 percent by value to $2.21 billion.

All of the Far Eastern markets, not including China and India (which now account for 56 percent of the gold being used for jewelry), saw weaker demand in 2012, according to Gold Demand Trends.

Egypt surprisingly saw a 35 percent increase in gold jewelry demand by volume but the WGC noted that it was still far below levels prior to the 2011 political uprising. Demand in Russia (the fourth largest gold jewelry market) increased for the second straight year. The market expanded in volume by 7 percent in 2012 to 81.9 tons.

In addition to jewelry and various investment vehicles, gold is used by the world’s central banks and for a number of technological purposes (such as electronics and dentistry). Overall gold demand measured by value increased to an all-time record of $236.4 billion. By volume, gold demand fell by 4 percent to 4,405.5 tons.

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The Gold Medal Personifies the Spirit of the Olympics

The two sides of the 2012 London Gold Medal. Photo credit: The official London 2012 website

As the London 2012 Summer Olympics officially begins, this may be the appropriate time to view the symbolic, historical and monetary value of the ultimate prize in the greatest sporting endeavor on the planet.

More than 10,000 athletes will spend nearly three weeks (some games already began) competing for the chance to receive at least one of 302 Olympic Gold Medals. But what are they actually receiving and how did the gold medal become the top prize in the Olympics?

The “podium value” of the London gold medal is worth approximately $708, according to the World Gold Council. It is the highest value of any gold medal in the history of modern games, primarily because of the record high prices of gold and silver.

Each gold medal is made up of 92.5 percent silver and 1.34 percent gold, with the remainder copper. The International Olympic Committee stipulates that each gold medal must have six grams of gold (as well as 92.5 percent silver).

The silver medal (which represents second place) is made up of 92.5 percent silver, with the remainder copper; and the bronze medal (for third place) is made up of 97 percent copper, 2.5 percent zinc and 0.5 percent tin.

If the London 2012 Games medals were made of solid gold, it would cost nearly $40 million to make. This is why the last time pure gold medals were presented was in 1912.

The custom of awarding gold, silver and bronze medals began in the 1904 Summer Olympics in St. Louis, Mo. These metals represent the first three Ages of Man in Greek mythology: the Golden Age, when men lived among the gods, the Silver Age, where youth lasted a hundred years, and the Bronze Age, the era of heroes.

Each medal is 85mm in diameter and between 8-10 mm thick. The gold and silver medals weigh 412 grams (0.9 pounds) and the bronze medal weighs 357 grams (0.78 pounds). They are the biggest and heaviest summer Olympic medals ever made, according to the WGC.

Eight tons of precious ore for all the medals were supplied by mining giant Rio Tinto and was mined at the Kennecott Utah Copper mine near Salt Lake City, Utah, as well as from the Oyu Tolgoi project in Mongolia, according to the official London 2012 website. For the small amount of non-precious elements used in the bronze medals, the zinc was sourced from a mine in Australia as well as from recycled stock, while the tin originates from a mine in Cornwall, England.

The metal was sent to Spain where it was turned into discs and then were produced at the Royal Mint headquarters in Llantrisant, South Wales.

Each medal takes 10 hours to make, according to the WGC. A 35mm disc is placed in a furnace and heated to 750 degrees Celsius (1,382 degrees Fahrenheit) to soften the medal. The metal disc is then struck 15 times under 900 tons of pressure.

All of the medals were designed by British artist David Watkins.

The circular form of the Olympic medals is a metaphor for the world. The front of the medal always depicts the same imagery at the Summer Games—the Greek Goddess of Victory, Nike, stepping out of the depiction of the Parthenon to arrive in the host city.

The design for the reverse, according to the London 2012 website, features five symbolic elements:

* The curved background implies a bowl similar to the design of an amphitheatre.
* The core emblem is an architectural expression, a metaphor for the modern city.
* The grid suggests both a pulling together and a sense of outreach—an image of radiating energy that represents the athletes’ efforts. 
* The River Thames in the background is a symbol for London and also suggests a fluttering baroque ribbon, adding a sense of celebration. 
* The square is the final balancing motif of the design, opposing the overall circularity of the design, emphasizing its focus on the center and reinforcing the sense of “place” as in a map inset.

For those in London, the medals can be seen at the British Museum throughout the Games.

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