Demand for gold jewelry fell sharply in the first quarter of 2025 as it became unaffordable amid record high gold prices, the World Gold Council (WGC) said.


In its Q1 Global Gold Demand Trends Report, the WGC noted that overall gold demand has declined in stark contrast to the growth in the value of gold.


The price of gold reached $3,249.70 per ounce as of May 2, 2025, according to the latest WGC data.


During the quarter, global gold sales reached 380 tons, down 21% year-on-year, as high gold prices adversely affected consumer affordability. The association said gold sales fell to the lowest point since 2020 as demand suffered due to the epidemic.


In value terms, however, gold jewelry consumption rose 9% year-on-year to $35 billion, with increases in almost all markets except China, which the WGC explained shows consumers are ready to expand their budgets.


Demand for gold jewelry fell 32% in China and 25% in India, the two main markets.


China


China's gold jewelry market was hit by a triple whammy of record gold prices, weak income growth and a shift towards pure gold investment products in the first quarter.


Demand of 125 tons hit a five-year first-quarter low and was 19% below the average for the same period in the past decade," the WGC said. Despite this, demand for gold jewelry remained relatively resilient in value terms, falling only 6% year-on-year to $12 billion."


As gold prices spiked, consumers stayed on the sidelines and/or switched to lighter weights and more affordable products. Uncertainty also prevailed on the trade side, as retailers were cautious about inventory levels ahead of the Chinese New Year.


The report notes that affordability will remain a top consideration for gold jewelry consumers going forward, especially as gold prices continue to rise.


Even though consumer preference for pure gold investment products, such as gold bars and coins, heated up in Q1, investment demand in China will continue to drive demand for gold jewelry, especially as interest rate cuts are expected to boost disposable incomes.


India


High gold prices also impacted gold jewelry demand in India, with the total falling to 71 mt, the lowest quarter since Q3 2020. However, the WGC noted that the value of demand was 3% higher than in the same period last year.


Consumers are buying smaller, lighter weight gold jewelry, or not buying it at all for now, hoping to stock up later when the price of gold falls.


Wedding-related demand remained relatively resilient, as this type of spending is essential," the report said. Interestingly, record gold price levels have not encouraged increased recycling. This is partly a reflection of India's relatively strong economy, which requires little distress selling."


In addition, more buyers are adopting a trade-in strategy when it comes to jewelry purchases. By the end of the quarter, about 40% to 45% of purchases were reported to involve some form of exchange. The upward trend in gold lending (i.e., using gold jewelry as collateral) also continued in the first quarter.


Need-based purchases (e.g. festivals and weddings) are likely to continue, but may not be able to offset the decline in discretionary purchases," the WGC added. Gold's role as a store of value has become more pronounced amidst financial market turmoil and uncertainty, and this is reflected in consumer purchasing behavior, as buyers shift from being driven by consumer intent to wealth preservation."