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Business News/ News / India/  China pips India as top gold jewellery consumer in 2023 amid high prices
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China pips India as top gold jewellery consumer in 2023 amid high prices

Higher prices pushed consumers towards light-weight or lower-carat items, with some buyers even cutting down on purchases

Gold prices in India have been on an upward trajectory Photo by Priyanka ParasharPremium
Gold prices in India have been on an upward trajectory Photo by Priyanka Parashar

New Delhi: China dethroned India as the world's top consumer of gold jewellery in 2023 as a surge in prices of the yellow metal hurt domestic consumption, as per data from the World Gold Council released on Wednesday. 

In 2022, India's gold jewellery demand was at 600.56 tonne, making it the leading market for gold globally. In comparison, China's demand stood at 570.8 tonne. However, China's gold consumption rose to 630 tonnes in 2023, surpassing India's which saw its consumption reduce to 562.3 tonnes.

“Global annual gold jewellery consumption was little changed in 2023; in fact, it was fractionally higher year-on-year even though the gold price set new records," WGC said.

China was the main engine of growth as demand recovered from a relatively weak 2022, but there were other pockets of growth—most notably in Turkey. “Demand in India was impacted by gold price strength, generating a notable tonnage decline year-on-year," the report said.

Gold prices in India have been on an upward trajectory with the yellow metal surging from 43,000 per 10 grams to 55,000 between November 2022 and November 2023. This increase hurt consumer demand, leading to a preference for lower-carat jewellery. MCX gold for April delivery was trading marginally higher at 62,463 per 10 grams today.

“Demand in India was impacted by gold price strength, generating a notable tonnage decline year-on-year. Fourth quarter demand in India was down 9% year-on-year, from a relatively elevated Q4 '22 base; this contributed to an overall decline in 2023 demand, down 6% year-on-year to 562 tonne," according to the WGC.

Higher prices pushed consumers towards light-weight or lower-carat items, with some buyers even cutting down on purchases. “The higher margins charged on gem-set and 18k jewellery further encouraged this shift," the council said. 

"During the fourth quarter, the October price correction, which coincided with Navratri, encouraged a strong consumer response. And Diwali purchases boosted sales in November. But this dried up in December as the price resumed its sharp upward trend, and some reports suggest demand was close to a standstill in the closing weeks of the year," it added.

Gold jewellery demand in India is likely to remain subdued in the March quarter if prevailing price levels sustain, it said.

Retailers are skeptical about any meaningful rebound in demand in the absence of a price correction.  

"Moreover, wedding jewellery demand is likely to be tempered given the fewer number of auspicious wedding days in the first quarter (16 versus 28 in Q1 2023). There could be pockets of demand in the run up to the general elections (April-May) during which time government spending generally tends to increase, but the outlook is relatively cautious," it added.

In contrast, China's gold jewellery demand is likely to stay stable, driven by consumers seeking value preservation. Nevertheless, challenges such as a predicted decrease in wedding numbers, high gold prices, and consumer preference for lightweight products could temper this demand.

 

 

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ABOUT THE AUTHOR
Suneera Tandon
Suneera Tandon is a New Delhi based reporter covering consumer goods for Mint. Suneera reports on fast moving consumer goods makers, retailers as well as other consumer-facing businesses such as restaurants and malls. She is deeply interested in what consumers across urban and rural India buy, wear and eat. Suneera holds a masters degree in English Literature from the University of Delhi.
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Published: 31 Jan 2024, 02:43 PM IST
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