China has dethroned India as the world’s top consumer of gold jewelry in 2023, as per data released by the World Gold Council (WGC) on Wednesday. The shift in rankings is attributed to a surge in gold prices, particularly in India, impacting domestic consumption trends. The WGC report reveals that China’s gold jewelry consumption rose to 630 tonnes in 2023, surpassing India, which saw its consumption reduce to 562.3 tonnes.
In 2022, India held the top position with gold jewelry demand reaching 600.56 tonnes, making it the leading market for gold globally. In comparison, China’s demand in 2022 stood at 570.8 tonnes. However, a recovery in China’s gold consumption in 2023, coupled with the impact of rising prices on Indian consumers, led to the change in rankings.
The WGC report notes that global annual gold jewelry consumption remained relatively stable in 2023, with only a marginal increase year-on-year, despite the yellow metal setting new price records. China played a significant role in driving growth, with demand rebounding from a relatively weak 2022. Other regions, notably Turkey, also experienced pockets of growth.
India’s gold consumption was notably impacted by the strength in gold prices, resulting in a decline in tonnage year-on-year. The fourth quarter of 2023 saw a 9% year-on-year decline in demand in India, contributing to an overall 6% year-on-year decrease to 562 tonnes for the entire year. The rising prices prompted consumers in India to shift towards lightweight or lower-carat jewelry, and some buyers even reduced their purchases.
The WGC report highlights that the higher margins charged on gem-set and 18k jewelry further encouraged this shift in consumer preferences. While the October price correction during Navratri and Diwali purchases in November provided a temporary boost, demand dwindled in December as gold prices resumed their sharp upward trend.
Gold jewelry demand in India is expected to remain subdued in the March quarter if prevailing price levels persist. Retailers express skepticism about a meaningful rebound in demand without a price correction. Moreover, the outlook for wedding jewelry demand is cautious, given the fewer auspicious wedding days in the first quarter and challenges posed by high gold prices.
In contrast, China’s gold jewelry demand is anticipated to stay stable, driven by consumers seeking value preservation. However, challenges such as a predicted decrease in wedding numbers, high gold prices, and consumer preference for lightweight products could temper this demand in the coming months.
The dynamics in gold consumption highlight the sensitivity of consumer behavior to price movements and the need for market participants to adapt to changing trends in the precious metal sector.
