Global Gold Jewelry Demand Strong in Asia while Weak in U.S., Europe and Middle East

Gold Jewelry demand increased 7 percent, year-over-year, to 556.9 tons in the first quarter of 2011, which translates to a record value of $24.8 billion, the World Gold Council said Thursday. India and China, the two largest markets for gold jewelry, together accounted for 349.1 tons or 63 percent of the total, $16 billion by value.

In the U.S., gold jewelry demand declined 10 percent to 20.5 tons, according to the WGC’s Gold Demand Trends report.

Demand for gold jewelry also fell in other parts of the world. In Europe, demand declined 11 percent to 4.7 tons and in the Middle East it dropped 39 percent to 10.9 tons.

India alone accounted for 37 percent of global jewelry demand. Demand increased 12 percent to 205.2 tons, translating to a 38 percent increase in value, according to the report. Demand in China increased 21 percent, year-over-year, to 142.9 tons ($6.4 billion). In percentage terms, Hong Kong was the largest growth market for gold jewelry, with demand up 32 percent to 7.3 tons.

“The regional breakdown of jewelry demand shows a story of two halves: strength in India and much of the east Asian region contrasting with broad weakness in the western and Middle Eastern markets,” WGC said in its report.

Jewelry demand accounted for 57 percent of all gold demand during the first quarter, according to the report.

(2010 Gold Statistics and 2011 Outlook after jump) 

Gold Jewelry Demand Up 18%, Total Demand Up 29%

The gold price rose for the tenth consecutive year in 2010 reaching $1,405.50 an ounce by the end of December on the London PM fix, a 29 percent increase from last year’s levels, the World Gold Council reports.

Last year’s price performance was driven by developments in key gold markets, WGC said in its Gold Investment Digest for the fourth quarter and full-year 2010. China saw increased investment activity, driven in part by innovative new gold investment vehicles offering improved access to the gold market. Globally, investors remained concerned about uncertainty in the macro-economic environment and turned to gold to hedge against weakness in the US dollar and rising inflation in many economies.

However, WGC noted that despite its high cost, global jewelry demand totaled 1,468 tons during the first nine months of 2010—a year-over-year increase of 18 percent. This includes a rebound in gold jewelry consumption in India, the world’s largest gold market.

In addition, gold demand for technological and industrial applications continued to recover during the first nine months of 2010, registering a 19 percent increase over the same period in 2009.

“The gold story in 2010 is about growth in demand and not just economic concerns. It is significant that consumers increased their gold jewelry spending during the first nine months of last year, despite the rising price of gold,” said Juan Carlos Artigas, WGC Investment Research Manager. “Strong investment activity and a normalization of gold demand in technological applications during the same period further supported gold’s stellar appreciation.”

Complete full-year data for gold demand will be available in February when the WGC publishes its Gold Demand Trends report.