RECORD GOLD RATES IMPACT JEWELLERY SECTOR: PURCHASE QUANTITIES DECREASE AS SPENDING REACHES NEW HIGHS

The gold market is witnessing an extraordinary year. The LBMA gold price set 53 new all-time highs, with the annual average reaching US$3,431/oz — a 44% increase from 2024. The fourth quarter alone saw an average price of US$4,135/oz, up 55% year-on-year.

While these surging prices fuelled record investment demand and pushed total global gold demand (including OTC) above 5,000 tonnes for the first time, they had a markedly different effect on the jewellery sector.

Sharp Decline in Jewellery Volumes

Global  jewellery consumption fell  18% year-on-year to 1,542 tonnes the lowest level in five years. This marked the continuation of a multi-quarter downward trend, with demand volumes weakening across virtually all major markets as affordability became a significant barrier for many buyers.

In China, the world's largest jewellery market, consumption dropped sharply, reaching its lowest level since 2009. India also saw a notable 24% decline, while the United States experienced an 11% cooling in jewellery demand as higher prices limited purchases of heavier, more traditional pieces.

The World Gold Council noted that this volume decline was entirely expected in an environment of successive record gold price highs. Consumers responded by buying lighter pieces, opting for smaller designs, or delaying bigger purchases.

Value of Jewellery Demand Reaches Record Levels

Despite the drop in tonnage, the value of global gold jewellery demand climbed 18% to a new record of US$172 billion. This divergence highlights that sentiment toward gold jewellery remained remarkably positive. Many consumers  particularly higher income buyers were willing to stretch their budgets to own gold, viewing it as both a cultural and emotional purchase as well as a long-term store of value.

In several markets, the higher per-gram price more than offset the reduction in weight purchased. This resulted in strong value-based spending, especially for premium, high-carat, or intricately designed pieces. Jewellers also supported demand through product innovation, such as incorporating coloured gemstones, enamel, and mixed materials to make pieces more accessible and appealing.

Regional Variations and Consumer Adaptation

China: Faced additional headwinds from a challenging economic environment, leading to weaker overall activity. However, seasonal gifting and self-reward purchases showed some resilience.

United States: Affordability pressures affected broader demand, but premium segments held up well, with value spending remaining relatively resilient.

India and Other Markets: High prices encouraged some consumers to use existing gold jewellery as collateral for loans rather than buying new pieces.

Overall, the data reveals a clear shift: buyers adapted to elevated prices by purchasing less gold by weight while maintaining or even increasing their monetary commitment to the category.

Outlook for 2026

Looking ahead, the World Gold Council expects jewellery demand in volume terms to remain weak in a persistent high-price environment. Tonnage consumption is likely to stay flat or similar to 2025 levels, assuming gold prices do not moderate significantly.

However, value based spending should continue to hold up reasonably well, absent major economic shocks. Jewellery may see a potential bottoming in 2026 if price gains slow, but the sector is expected to be overshadowed by strong investment demand in ETFs, bars & coins, and central bank buying.