Global demand for gold jewellery rose 10 per cent in the third quarter of 2022, demonstrating continued growth to match pre-pandemic levels, the World Gold Council (WGC) said.

A pullback in gold prices alongside a more favourable consumption sentiment in the major markets of India and China pushed global demand to 523.1 tonnes compared to 476.5t last year, WGC’s Gold Demand Trends Q3 2022 revealed.

India saw a 17 per cent rise in demand to 146.2t while demand in China was up 5 per cent to 163.4t. 

WGC data also showed that gold prices reached more than US$2,000 per ounce in early March before dipping to around US$1,800/oz by end-June. Prices dropped further to US$1,649.50/oz as of November 2.

Demand was also healthy on a longer-term comparison, exceeding its five-year quarterly average of 501t. Year-to-date demand reached 1,454t, up 2 per cent from the same period in 2021.

“This signals a continued normalisation of the market to pre-Covid levels of activity, aided by a pullback in the gold price in many markets during the quarter. Q3 also saw a further build-up in inventories as growth in fabrication exceeded that of consumption,” the council added.

After disruptive lockdowns in China, gold jewellery demand rebounded in Q3, rallying 58 per cent quarter-on-quarter. Amid sporadic restrictions imposed throughout the quarter, consumer sentiment in July and August was upbeat, aided by weaker local gold prices and the release of pent-up demand from Q2, said WGC.

"Looking ahead to demand in Q4, we see more upside potential than downside. Seasonality and the government’s priority of stimulating consumption may provide some support for gold jewellery sales in the final quarter, along with a continued preference for quasi-investment gold jewellery products," it added. "But challenges from the zero-Covid policy cannot be overlooked. The national day holiday early in Q4 saw uneven gold jewellery demand, with retailers in lockdown-stricken cities disappointed." 

India, for its part, saw strong demand in the South. Q3 demand was 12 per cent above its five-year quarterly average (131t) and took year-to-date demand to 381t, 10 per cent higher than last year and almost equivalent to 2019 pre-Covid levels. 

Urban consumers drove the recovery in gold jewellery demand as economic activity in these areas normalised. Credit expansion meanwhile added impetus to this demand, with bank loan growth touching a nine-year high by quarter-end. 

“We are positive in our outlook for the rest of the year as festival and wedding demand should be supportive. But demand is not expected to match last year’s record-breaking fourth quarter, particularly given that higher inflation relative to urban India may crimp demand in the important rural segment,” WGC noted.