The World Gold Council (WGC) has released its Q3 Gold Demand Trends for 2016, highlighting a 21% year-on-year fall in gold jewellery demand to 493.1t.
According to the report this is the largest decline since Q2 2014 and the lowest third quarter for jewellery demand since 2011 – a time when average gold prices were some 28% higher than recent levels.
In addition, year-to-date jewellery demand is 18% down on last year: 1,423.6t vs 1,732.7t. This is the lowest Q1–Q3 total since 2009.
The WGC pins high prices as the key reason for continued weakness in the jewellery sector, which has been severely depressed throughout 2016 so far. Barring just three or four very minor exceptions, jewellery demand fell in every consumer market that the WGC track.
However, while persistently high prices discouraged consumers from around the globe, sterling-based prices were the exception, given weakness in that currency following the referendum decision for Britain to leave the EU.
Looking ahead, the WGC believe the fourth quarter – having started on a stronger footing – should see a recovery in the jewellery sector.
The October drop in the gold price was fortuitously timed. The approach of key buying occasions, such as: the festival and wedding season in India; the main holiday season in Western markets; and Chinese New Year, make consumers in these markets more alert to lower prices.
But, the report cites, “that is not to say that we expect a clear revival”. Pressures remain as the consumer environment in European markets and the US remains hesitant.