Gold jewellery manufacturing in the world declined 4% year-on-year to 2 129 tonnes in 2018, according to the recently released Refinitiv GFMS Gold Survey 2019.
Weakness across Europe, following turbulent internal politics and cooling trade, saw gold jewellery demand across the region slide 6% y/y to a record low, driven lower by a precipitous decline in Turkey following the collapse of the local currency, and a fall in Italian offtake, according to the survey.
Counterbalancing this weakness was a strong performance from North American gold jewellery manufacturing, which jumped by 8% in light of a stronger dollar and improving economy, with demand from the US 10% stronger on a y/y basis. Gold jewellery manufacturing demand in Asia, which as a bloc dominates demand at over 80% of the global total, was weaker last year, retreating 5% from 2017 volumes.
Chinese jewellery manufacturing returned to growth for the first time since 2013, rising 2% to 688 tonnes, with demand boosted by the market's preference for a return to pure gold items.
Indian manufacturing demand retreated 12% on an annual basis, reaching an estimated 632 tonnes.
Demand in the Middle East was weak with some markets in the region severely impacted by the introduction of the Goods and Services Tax (GST) in the United Arab Emirates (UAE).
Gains and falls
The survey found that healthy gains in gold jewellery manufacturing from North America was offset by falls across Europe and Asia.
The annual survey looks at the shifts and developments in the global gold markets, their fundamentals and their drivers over the year and setting the scene for the future.
"As usual the prospect for higher price depends on risk hedging at the professional level while grass roots activity should support a higher base price this year and next," the survey states.
Gold used in industrial manufacturing saw a modest increase in 2018, rising 3% to a four-year high of 391 tonnes. This sector was helped by a robust electronics segment which showed a 4% annual rise on the back of strong growth in the semi-conductor market.
Total physical demand for gold saw little change in 2018, slipping by less than 1%, with a stronger official sector coupled with gains in industrial demand, offset by a contraction in jewellery fabrication and retail investment, according to the survey.
Net official sector purchases reached their second highest level this century, standing at 536 tonnes in 2018 on the back of continued and fresh acquisitions from emerging markets (EMs).
Mine production grew 2% in 2018 to a total of 3 332 tonnes, fuelled by a considerable production increase in Indonesia and the US.
Total cash costs rose by 5% to $696/oz, while all-in sustaining costs increased by 4% to $897/oz.
Global gold scrap supply fell 3% in 2018 to 1 178 tonnes, a three-year low, as weak price action limited recycling.