China has overtaken India as the world's largest consumer of gold jewelry in 2023, according to data released by the World Gold Council. The surge in gold prices has dampened domestic consumption in India, allowing China to claim the top spot.
In 2022, India led the global market with 600.56 tonnes of gold jewelry demand, while China trailed behind at 570.8 tonnes. However, in 2023, China's consumption surged to 630 tonnes, surpassing India's reduced consumption of 562.3 tonnes.
Despite new record highs in gold prices, global annual gold jewelry consumption remained relatively steady in 2023, with slight year-on-year growth, according to the WGC.
China's robust demand was a significant driver of this growth, rebounding from a weaker 2022. Turkey also saw notable growth, while India's demand suffered due to the strength of gold prices, resulting in a substantial decline in tonnage.
In India, gold prices climbed from Rs.43,000 per 10 grams to Rs.55,000 between November 2022 and November 2023, negatively impacting consumer demand. Many buyers opted for lighter-weight or lower-carat jewelry, and some even reduced their purchases altogether.
The shift towards lighter-weight items was further encouraged by higher margins on gem-set and 18k jewelry. However, in China, demand for gold jewelry is expected to remain stable, driven by consumers seeking to preserve value.
Despite this stability, challenges such as declining wedding numbers, high gold prices, and consumer preference for lightweight products could temper future demand in China.
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