Record gold price took its toll on Q2 jewellery consumption as volumes fell 19% to a four-year low of 391 tonnes, according to the latest World Gold Council’s Gold Demand Trends report.
In value, Q2 jewellery demand measured US$29bn (£22.5bn). This was a 4% decrease y/y, as the rise in gold prices did not compensate for the drop in volume.
The European market also saw a Q2 that was weaker, with regional demand at 15 tonnes being 3% less.
According to the report, the main cause of the decline is poor consumer sentiment (especially in Germany) and economic doom. In June, sales in France and the UK suffered from uncertainty related to elections.
In some markets, the demand for engagement rings was also weak. This may have been due to a shift in price or a drop in demand.
Gold jewellery production also fell 17%, to 390.6 tonnes. However, gold jewellery inventories grew by 36%, to 20.0 tonnes.
Overall, the gold demand in Q2 excluding OTC was down by 6% y/y at 929 tons as a sharp fall in jewellery consumption overshadowed mild gains in every other sector.
However, adding in OTC investment to total gold demand yielded a 4% y/y increase to 1,258tonnes – the highest Q2 in its data series back to 2000.
The total supply of gold also increased by 4% year-on-year to 1,258 tons. The second-quarter record of 929 tonnes was achieved by increasing mine production by 3%.
In response to the increasing gold price, recycling supplies were at their highest level for the second quarter in 2012. They increased by 4%, to 335.4 tons.
According to the report, Western investments are expected to rebound in 2024 to compensate for a decline in consumer demand and possible central bank buying.