World Gold Council: China’s gold jewelry demand fell 8% year-on-year in the first quarter of this year – Teller Report

The epidemic has affected many industries, and the same is true of gold and jewelry stores. On April 28, the latest “Global Gold Demand Trends” report released by the World Gold Council showed that in the first quarter of 2022, China’s gold jewelry demand fell by 8% year-on-year, with a total of 177.5 tons. Although consumer demand was strong in January-February, the growth momentum was disrupted by the escalation of prevention and control measures in several cities as the local epidemic resurfaced in March.

Data show that in the first quarter, China’s gold ETF holdings decreased by 13.5 tons (about 5.3 billion yuan), which was the largest single-quarter net outflow since records began. The total holdings at the end of March were 61.8 tons. Against the backdrop of rising gold prices, investors’ profit-taking behavior may be the main factor leading to outflows. Also, while gold coin sales were strong in the first quarter (thanks to strong sales of themed products such as the Year of the Tiger and Winter Olympics), demand for bullion fell significantly. The escalation of epidemic prevention and control at the end of the quarter and the slowdown in residents’ income growth may be the main reasons. The increased gold price volatility caused by the conflict between Russia and Ukraine may also dispel investors’ buying ideas to a certain extent.

However, while overall jewellery demand fell in the first quarter, it was down only 8% from last year’s high base. The World Gold Council believes that despite the impact of the epidemic, gold jewellery demand in the first quarter remained relatively stable, staying near its 10-year average. However, jewellery demand in the second quarter may face some challenges. Wang Lixin, CEO of the World Gold Council China, said that looking forward to the second quarter of 2022, the epidemic prevention and control measures taken by many Chinese cities and their impact on household income and consumption behavior are likely to be the biggest challenges for China’s gold demand in the short term. The challenges will also put further pressure on the second quarter, which is already a traditional off-season. If the epidemic is effectively controlled and the lockdown measures are lifted in time, the long-suppressed consumer demand for gold jewellery may be released; expectations of inflationary pressure and low yields may support investment demand for gold.