Latest jewellery industry insights - China

Tonnes	Q2'23	Q2'24	Year-on-year % change
World total	479.4	390.6	-19
China, P.R.: Mainland	132.1	86.3	-35

• Global gold jewelry consumption decreased by 19% year-over-year (y/y) to 391 tons in Q2. Despite resilient demand in Q1, the total for the first half (H1) of the year reached 870 tons, down 10% y/y. China experienced the largest decline due to a weaker domestic economy and record high gold prices.

  
  

  In an extraordinary quarter marked by record-high gold prices, global jewelry consumption dropped sharply by 19% year-over-year (y/y) to 391 tons, making it the weakest second quarter since 2020. For the first half of the year, demand fell by 10% to 870 tons, despite a relatively strong performance in Q1.

  
  

  In value terms, Q2 jewelry demand was valued at $29 billion, a 4% decline y/y, as the rise in gold prices didn't fully offset the drop in volume. However, H1 demand was 2% higher than last year, reaching $61 billion—the highest H1 since 2013, when Q2 demand peaked at 834 tons.

2024 gold prices, USD/ounce

• In Q2, China's gold jewelry demand dropped significantly by 35% year-over-year (y/y) to 86 tons, the weakest for a Q2 since 2009 and 46% below the ten-year average. This decline was driven by rising gold prices and slowing economic growth, which dampened consumer sentiment. For the first half of the year (H1), total demand reached 271 tons, down 17% y/y and the lowest since H1 2020.

  
  

  The sharp rise in gold prices, especially after a 10% increase in March, and the decelerating growth of China's economy, including slower GDP and disposable income growth, constrained consumer affordability, leading to weaker demand. This was evident during the traditionally strong Labor Day holiday in May, where sales were disappointing.

China's cautious consumer environment, influenced by housing market challenges, a weak local equity market, and an uncertain economic outlook, has led to increased savings and reduced spending on recreational and discretionary items. This trend was highlighted in McKinsey's 2024 Chinese consumption research.

In response, the demand for lightweight, affordable jewelry has grown, with 24K hard pure gold products outperforming other categories. Smaller, lower-cost pieces have become popular, a trend consistent with 2023 insights into the Chinese gold jewelry market.

The gold jewelry industry in China is now undergoing significant consolidation due to narrowing retail margins, which have prompted many jewelers to focus on higher-margin products with intricate designs and gem inlays to maintain profits. While these products perform well at the high end, the mass market is more interested in lower-cost items.

Looking ahead, the outlook for gold jewelry demand in the second half of the year is modest. Although Q4's seasonal strength may provide some support, consumer sentiment is expected to remain fragile until clear signs of economic recovery appear. Additionally, if gold prices continue to rise, demand may remain subdued.

Sources: Nasdaq, World Gold Council, McKinsey