Research firm Metals Focus warned in its latest report that record-breaking gold prices are reshaping the structure of gold demand, with jewellery consumption taking a notable hit. Global gold jewellery consumption is projected to fall to its lowest level since the pandemic in 2026, down more than one-third from 2023. As jewellery demand weakens, investment in gold bars and coins is poised to take its place and become the largest source of gold demand.

The firm noted that while the unsustainable rise in global sovereign debt remains a key long-term driver for higher gold prices, investors need to watch another weakening pillar — jewellery demand. Metals Focus believes that although elevated gold prices boost the value attribute of jewellery and lift sales revenue, they erode demand when measured by physical weight.

Jewellery Consumption Under Significant Pressure

The report emphASIsed that the divergence between "value" and "volume" in the market is growing increASIngly important. Consumers are still paying high amounts for gold jewellery, yet they receive less physical gold by weight due to lofty prices. This means retail revenue appears resilient, but upstream physical demand, fabrication activity and refining throughput may have already weakened.

Metals Focus stated this softness is especially evident in the world’s two largest gold jewellery markets. In the first half of 2026, India’s gold jewellery consumption fell 17% year-on-year, while demand in China dropped sharply by 30%. Over the same period, jewellery consumption in other regions worldwide also declined by 18% compared with the first half of 2025.

Changing Consumption Patterns

Analysts said high gold prices are altering consumer behaviour across South ASIa, East ASIa and the Middle East. High-purity gold jewellery in these regions has historically served both decorative and investment purposes. However, some consumers are switching to gold bars and coins, products that offer direct exposure to gold prices with lower premiums.

The report also mentioned gold-filled and gold-plated products are attracting more attention. Manufacturers are increASIngly using gemstones, diamonds and other alternative materials to reduce the precious metal content in each piece. At the same time, consumers are purchASIng less frequently, delaying purchases or selecting smaller items while keeping overall spending relatively unchanged.

Investment Demand Remains a Key Support

Despite the continuous weakness in the jewellery market, Metals Focus does not expect this trend to derail gold’s overall bull market in the second half of the year. The firm said fundamental factors supporting gold prices over the next six months remain solid, including central bank gold purchases, concerns over currency depreciation, doubts about sovereign debt sustainability, US policy uncertainty and rising demand for portfolio diveRSIfication.

Backed by these factors, Metals Focus believes there is still scope for gold prices to move higher. Nevertheless, higher prices will create a feedback effect, further suppressing jewellery demand measured by weight. This means as gold prices keep climbing, jewellery will become an increASIngly weak source of physical support, and investment and central bank demand will absorb supply to a greater extent.

Market Size Cannot Be Overlooked

Metals Focus stressed that the sheer size of the jewellery market makes this structural shift highly significant. The firm estimates that raw gold used for global gold jewellery fabrication was worth approximately $182 billion in 2025, compared with around $8 billion for silver jewellery and $3 billion for platinum jewellery. Measured by weight, total gold jewellery demand stood at roughly 53 million ounces.

Still, analysts noted falling demand does not mean consumers have lost interest in gold. Gold jewellery still carries cultural, wedding, gifting and investment attributes, and spending linked to precious metal content remains strong. High gold prices are reshaping the market and forcing both consumers and manufacturers to adjust their strategies.