Gold jewellery market consumption ushered in a recovery

The National Bureau of Statistics recently released consumption data for the first quarter of 2023. According to the data, total retail sales of consumer goods reached 11492.2 billion yuan, marking a 5.8% increase year-on-year. Specifically, retail sales of gold, silver, and jewellery totaled 97 billion yuan, up by 13.6% compared to the previous year. March alone saw retail sales of 28.8 billion yuan, reflecting a 37.4% year-on-year increase. Notably, within the broader category of retail sales, the sector experiencing the most significant growth was that of gold, silver, and jewelry, indicating a robust recovery trend.

The jewellery market has seen a surge in consumption following adjustments to epidemic policies. The first quarter of 2023, coinciding with the Spring Festival, traditionally a peak season for gold jewellery consumption, has witnessed a notable rebound. Major jewellery hubs such as Beijing, Shanghai, and Shenzhen reported increased foot traffic, with renowned brands like Chow Tai Fook, Lao Fengxiang, and Liufu capitalizing on marketing opportunities, resulting in bustling stores and even crowded showcases at wholesale markets. Retailers have also reported heightened purchases of gold jewelry.

Chow Tai Fook Group recently disclosed its first-quarter performance, revealing a 14.2% year-on-year increase in retail value. Mainland China contributed significantly to this growth with a 9.6% year-on-year rise, accounting for 88.9% of the group's total retail value. Although same-store sales experienced a 5.6% decline overall, specific categories like jewellery inlays, platinum, and K-gold jewellery saw sharper declines of 19.3% year-on-year. Conversely, retail sales in Hong Kong, Macao, and other markets surged by 71.2% year-on-year, constituting 11.1% of the group's total retail value, with same-store sales soaring by 96.5%.

According to data from the China Gold Association, gold consumption during the period from the Spring Festival to the Lantern Festival in 2023 rose by 18.2% year-on-year. Cultural and creative products, bracelets, and other jewellery accessories for the Year of the Rabbit, along with investment products such as gold coins and bars, saw strong sales during the Golden Week.

Valentine's Day on February 14th boosted sales of gold and silver jewellery, driven by their properties of value retention and enhancement. Personalized jewellery sales also witnessed significant increases, with prices of jadeite, jade, and gemstones rising accordingly, further contributing to overall year-on-year growth.

Since mid-March, international gold prices have shown a continuous upward trend, attracting increased attention and investment. The domestic gold price followed suit, rising significantly within a week at physical stores like Chow Tai Fook, Zhou Shengsheng, and Lao Fengxiang, with prices increasing by up to 40 yuan per gram and surpassing 580 yuan per gram at their peak. Overall, March saw a 6.4% increase in gold prices, marking an 8% rise compared to the previous year.

The jewellery exhibition circuit has resumed amidst the eased epidemic situation. Events such as the Thailand International Jewellery Exhibition, Hong Kong International Jewellery Exhibition, and China International Jewellery Exhibition held from February to March attracted significant attention and attendance from global exhibitors, buyers, wholesalers, and enthusiasts alike.

Jadeite and precious stones faced supply shortages during these exhibitions, with many industry insiders noting a general price increase. Retail prices for platinum necklaces and rings, for instance, surged to an average of 1820 yuan per gram, a 2.3-fold increase from 2022. Wholesale prices for gold jewellery averaged 2660 yuan per kilogram, a 3.5-fold rise from the previous year, while silver jewellery prices doubled to 6200 yuan per kilogram. High-grade gemstones like diamonds, red sapphires, and turquoise also saw substantial price hikes, with rubies particularly doubling in value.

A demographic shift in gold jewellery consumption is underway, with younger demographics taking the lead. According to the 2022 National Trend Jewellery Research Report, consumers aged 25 to 34 years old constituted the largest segment for gold jewellery purchases in mainland China, accounting for 55% of the market. The China Gold Association predicts that Generation Z consumers under 25 years old will increasingly drive gold jewelry consumption trends in the future, pointing towards a younger direction for China's gold jewellery market.

Changing consumer perceptions have shifted the focus from emotional purchases to value retention. The World Gold Council noted that gold jewellery serves dual purposes as both a dazzling accessory and a store of wealth, aligning with consumer demands for both aesthetic appeal and investment value. Recent advancements in domestic gold jewellery design and craftsmanship have further enhanced its appeal to younger consumers, underscoring a broader trend towards value-centric consumption.

In summary, evolving market dynamics, coupled with changing consumer preferences and economic conditions, are shaping a dynamic landscape for the gold and jewelry industry in China.