Global gold jewellery demand rebounded in 2021 from its 2020 slump to reach an estimated 1,805 tonnes, a 40% increase year on year.
The recovery was led by China and India, and while higher demand in China was relatively consistent throughout the year, it was a surge in India, especially in the last quarter of 2021, that helped global demand beat our earlier expectations. Indian demand increased by an estimated 123% year on year, a sign of its citizens’ faith on the yellow metal as store of value. The demand in other Asian markets such as Thailand, Malaysia, Indonesia and Vietnam also recovered from its 2020 low as easing of lockdowns and economic recovery encouraged more shoppers to go for the metal. In other markets such as the Middle East, Europe and America, demand also increased substantially.
Today’s Chinese new generation prefers high-end designer jewellery carrying cultural heritage with increased aesthetics
China
With China being a traditional buyer of gold jewellery, there was no surprise that demand recovered last year, as China was one of the first economies to recover from the pandemic-induced slowdown. Additionally, the price of gold had also stabilised. Today’s Chinese new generation prefers high-end designer jewellery, carrying cultural heritage with increased aesthetics.
The purchasing power of urban Chinese consumers has increased hugely over the years and, hence, the appeal of this jewellery is on the rise.
However, if we look at average Chinese jewellery fabrication in the last decade, the 2021 numbers were markedly lower. In 2021, China’s jewellery fabrication stood at 621 tonnes against average yearly fabrication of 730 tonnes. Perhaps not surprisingly, the slowdown in demand mirrors the country’s growth rate, which has moderated from an average rate of around 9.5% per quarter between 2006 and 2012, to a lower, but still enviable, rate of 6.5% per quarter. During the boom years, the emerging middle class started spending on big-ticket luxury items, including gold, not only at home but in tourist destinations such as UAE. As growth has moderated and competition from other brands and goods and services has accelerated, gold has lost ground, and total tonnage has fallen.
In 2021 India’s economy started to open up, consumer confidence returned and the recovery has been spectacular.
India
There was no surprise that demand for gold recovered strongly in India in 2021. 2020 was a disaster as the country went to an early and extended lockdown in the first half of the year. Even in the second half, economic activity was restricted, which impacted the demand for high-value goods such as jewellery, while marriage ceremonies, and the associated gold purchases, were deferred.
In 2021, after India rolled out its vaccination drive across the country, the economy started to open up, consumer confidence returned and the recovery has been spectacular. Deferred purchases from postponed weddings, in particular, boosted demand in the last quarter of the year.
Further, Hindu marriage dates were strikingly higher this time than last year. If we look at the country’s imports figure, the country imported only 224 tonnes of gold in the second half of 2020. While in 2021, this rose to 497 tonnes.
China GDP Growth % (Actual and Forecast(F)
Source: IMF=World Economic Outlook, Eikon
Jewellery Fabrication in India and China (tonnes)
Source: Refinitiv Metals, Eikon
Besides marriages, festivals, especially in Q4, brought shoppers back to the jewellery markets. Dushera and Dhanteras are two auspicious occasions when people buy jewellery for well-being. Since they missed out in 2020, buyers flocked into the jewellery shops this time.
Elsewhere in Europe and North America, jewellery demand also continued to recover. Demand in Europe increased by 11% year on year. However, intermittent lockdowns and other related restrictions to stop the spread of the virus stopped demand from reaching its full potential.
In North America, with its economy recovering from the pandemic-induced slowdown, gold demand registered an increase of 10% year on year.
China and India together accounted for just over two-thirds of global jewellery demand, amounting to 1,229 tonnes in 2021. While this looks spectacular compared to 2020 due to the low base, we don’t expect another ‘stellar’ year in 2022.
A slowing China may hurt consumer sentiment and jewellery buying, while in India, pent-up demand has already been absorbed.
Demand in the rest of the world is expected to be broadly flat, although the Middle East could be the exception. We are expecting demand to increase by 5% to 7% on a year-on-year basis.
China and India together accounted for just over 2/3rds of global jewellery demand amounting to 1,229 tonnes in 2021
