China Lockdowns Depress Gold Jewelry Sales

As reported by the World Gold Council, gold demand has started the year well, with a 34% year-on-year increase. This is mainly due to exchange-traded funds and gold’s status as a safe haven. Demand for gold bars and coins was 11% above the five-year average at 282t. In the jewelry sector, however, demand decreased by 7% year-on-year to 474t, mainly due to falling demand in China and India. Industry demand rose to a four-year high of 82t, 1% higher than the same period the previous year.

China has been struggling with new COVID 19 outbreaks since the beginning of the year, prompting the government to close off some major cities such as Shanghai under the zero COVID policy. This also affected the gold market, where demand for gold bars and coins fell 20% year on year. Jewelry demand fell by 7%, and the lockdowns in China’s technology centers were also felt in the industrial sector. The drop in demand in China was compounded by the drop in demand in India, as the falling number of weddings and rising gold prices led to a decline in sales.

Purchases by central banks doubled compared to the previous quarter, increasing official gold reserves by 84t. Egypt and Turkey are said to have been among the main buyers.

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