Refinery services provider Heraeus finds in its latest precious metals appraisal that Chinese gold jewellery consumption has reduced owing to high prices – similar to what has happened in India.

The Chinese Gold Association reports that total gold consumption was down 3.5% year-on-year in the first half of this year, to 505 t. The largest decline was in the jewellery sector, which contracted by 26% year-on-year to just below 200 t.

This was partially offset by a strong resurgence in bar and coin physical investment demand, as well as low single-digit growth in industrial demand.

According to the World Gold Council, Chinese gold jewellery demand was the weakest since 2009 (excluding 2020) in the first half of the year and prices will have to moderate for jewellery demand to pick up.  

For jewellery demand in the Chinese and Indian markets, price and perceived value are the key drivers.

Although physical investment in China has been strong so far this year, more recently exchange-traded funds reversed to net redemptions in July.

As the gold price has been trapped in a narrow range, the domestic stock market has risen by more than 5.5%, potentially encouraging investors chasing momentum to rotate back into equities, Heraeus says.

The gold price averaged $3 349/oz as of August 1.

In turn, platinum closed 5.7% lower week-on-week on August 1 at $1 312/oz.

Heraeus says diesel powertrain demand is waning in the European passenger vehicle market, with the heavy-duty vehicle sector also coming under increasing pressure.

Registrations of diesel cars were 28% lower in the year-to-date in the EU, with these losses being offset by hybrid vehicle registrations. The diesel-driven vehicle market share totalled 9.4% in the year-to-June, compared with 12.8% in the same months of last year.

Western European platinum demand from diesel passenger cars is forecast to fall nearly 20% year-on-year so far this year as a result of this contraction. The trucking sector is also facing headwinds that could add downside risk to platinum autocatalyst demand.

New registrations of trucks in the EU were 15.4% lower year-on-year in the first half of the year as economic headwinds inhibited demand for new vehicles.

In Western Europe, platinum diesel autocatalyst demand is split about 60:40 in favour of passenger vehicles compared with commercial vehicles, but declines in both sectors could have a significant impact on regional platinum demand.

Heraeus adds that with European countries likely to miss its battery electric vehicle (BEV) sales target this year, it bodes well for palladium demand. The BEV market share in the region currently stands at 15.6%, which should have been 17.5% by the end of the year.

Original-equipment manufacturers have reportedly wanted the EU to relax emissions and BEV market share legislation, as well as extend timelines for compliance.

The lag in BEV sales means that the market share of catalysed vehicles could remain higher for longer, supporting a longer tail for palladium autocatalyst demand. 

The palladium price closed August 1 at $1 210/oz.