Gold Jewellery Demand Slumps To Covid-19 Times Despite Rally In Gold Prices, Says WGC Report

WGC Gold Demand Trends: Gold in the form of jewellery has long been traditional form of investing in the yellow metal in India. The allure of gold has also been stellar in 2025, as demand for a safe haven asset increased amid rising uncertainties on account of US President Donald Trump’s proposed trade tariffs and conflicts such as the Israel-Iran conflict.

However despite these events and the rising investor interest in gold, demand for gold jewellery has remained subdued according to a report by the World Gold Council (WGC).

The WGC said in its report that global jewellery consumption posted double-digit losses of 11 per cent quarter on quarter (q-o-q) and 14 per cent year-on-year (y-o-y) in the quarter ending June 30, 2025 of the current fiscal, falling to 341 tonnes.

Notably, this is the lowest level at which the demand has been since the quarter ending September 30 of FY 20 which dampened the demand for the yellow metal because of Covid-19. The report said that most of this decline came from the Indian and Chinese market. India and China are among the biggest buyers of gold jewellery. However, their combined market share fell to less than 50 per cent of the total global demand for gold jewellery for the third time in the last five years, the report said.

According to the report, a surge in gold prices to record highs impinged on affordability. On a y-o-y basis, the demand for gold jewellery in India declined to 88.80 tonnes in the Q1 FY 26 by 17 per cent compared to 106.60 tonnes in the corresponding quarter of the preceding fiscal.

On an annual basis, the demand for gold jewellery in China (including Hong Kong and Taiwan) also declined to 73.80 tonnes in the June quarter of the current fiscal by 20 per cent compared to 92.10 tonnes in the same quarter of the previous fiscal.

Sequentially, the demand for gold jewellery in China also declined by 44 per cent compared to 132.50 tonnes in the quarter ended March 31, 2025. WGC attributed the drop in demand to a ‘pronounced decoupling’ between consumption volumes and value in price sensitive markets like India and China.

The report found that in India, the demand dropped as gold prices breached the Rs 1 lakh per 10 grams mark for the first time ever. However, WGC added that the surge to record highs only impacted the mass market segment as the average weight of jewellery pieces purchased by affluent buyers remained unchanged.

According to the report, the price rise has also prompted a shift towards light-weight items in the mass market segment as consumers increasingly prefer 18 karat plain gold jewellery for its affordability. Additionally, gold-plated silver jewellery is also gaining acceptance. This shift in preferences is also indicated by the Bureau of Indian Standards approving hallmarking of 9 Karat jewellery.

The report also found recycling of gold jewellery to be subdued during the June quarter as consumers either exchanged old jewellery for new, or, increasingly pledged it as collateral for loans.

The report added that the WGC anticipates a seasonal recovery in demand in the September quarter amid the festive and wedding seasons. However, continued pressure from high gold prices is expected to continue.

On the other hand the WGC shared its outlook that the environment is encouraging for Indian gold investment to remain stable throughout 2025 on account of healthy rural demand, broad-based economic growth, and a good rainfall. Additionally, the supportive environment for gold investment in India is likely to persist amid prolonged global trade disruption and geopolitical tensions, it said.