2022, Gold jewellery market and how Gold continues to dominate the market in China

2022, Gold jewellery market and how Gold continues to dominate the market in China

The notable rebound in Q3 Chinese gold jewellery demand from the COVID-stricken Q2 and easing COVID restrictions paints a bright picture for the future and suggests that opportunities abound. The key findings include that Chinese consumers are paying increasing attention to gold jewellery as a financial asset, that gold products are at the forefront of key buying occasions and dominate China’s jewellery market, that “Self-wear” is the most important jewellery buying occasion and women drive jewellery consumption and overall, that there is an optimistic picture for China’s gold jewellery demand during the next 2 years.

China’s gold jewellery demand in the first three quarters of 2022 faced a roller-coaster ride. After a robust Q1, driven by upbeat sales ahead of the Chinese New Year’s holiday, full-scale lockdowns in key cities slowed Q2 demand down significantly. And Q3 staged a sizable q-o-q recovery as local economic growth rebounded and COVID-related restrictions eased. Investment motives constitute another key driver of Q3’s jewellery demand strength as consumers seek value preservation in gold products amid COVID-related uncertainties and the rapidly depreciating local currency.

In coming quarters, it is expected that demand for gold jewellery in China rebounds as China exits its zero-COVID policy. Based on Bloomberg’s economists’ median forecasts of future gold prices and the CNY exchange rates, macroeconomic assumptions from Oxford Economics, as well as mar-riage estimates derived from macro data assumptions under corresponding scenarios, stable gold jewellery consumption during Q4 and a strong start to 2023 are predicted.

Other factors are also at play:
• First, year-end gifting demand and the traditional sales boosts around the Chinese New Year’s Holiday should provide seasonal strength.
• Second, China’s policy to boost consumption may provide additional support for local gold jewellery purchases,
• Third, Chinese households’ tendency to save may remain elevated in the near term after three years of strict COVID controls, continuing to benefit gold jewellery consumption,
• Lastly, the continuous return of the “per-gram” based pricing model could instigate fur-ther efforts from retailers to promote heavier products for higher margins.

As the need for consumers to preserve value increases, it’s believed that highlighting the financial worth of gold jewellery products in the current economic environment could be beneficial to re-tail sales. Investigation of key jewellery shopping occasions found that “self-wear” drives jewellery sales, that female clients contribute the most to retail sales across all buying occasions, that gold dominates all jewellery shopping occasions and that clients at different life stages have different needs.

Looking ahead, there is definitely optimism about sales of gold products. And most retailers be-lieve that “self-wear” and “wedding purchases” will continue to play key roles in driving gold jew-ellery demand.