Market Report

No. 3 | 20^th January 2025

Signet slumps: US gold jewellery demand faces a fourth year of decline. The world’s largest retailer of diamond jewellery has reported a year-onyear fall in sales. Signet Jewelers reported Q4 sales of $2.34 billion, down 12% year-on-year. This results in annual sales of just over $7 billion, an 11% year-on-year decrease. Gold jewellery demand in the US is typically strongest in the fourth quarter, with Q4 demand since 2010 averaging 39% higher quarter-on quarter (source: World Gold Council). Consequently, year-on-year declines in Q4 sales disproportionately affect the region’s ability to match the previous year’s total gold jewellery demand. By the end of Q3, demand was already 3% lower year-on-year, sitting at 85.1 tonnes. Signet’s Q4 performance could therefore serve as an early indicator of a likely fourth consecutive year of contraction in US gold jewellery demand, brought about by the consistently high gold price causing consumers in the US to shift to lower price point products, including lower-carat gold. This trend aligns with the global gold jewellery market, which continues to struggle just below the 2021 level of 2,145 tonnes. Available data (up to Q3’24) shows that global gold jewellery demand in 2024 is down over 10% year-to-date. Therefore, if Q4 is down year-on-year the implication is that the year-end total could be more than 10% lower year-on-year.

Speculators are the most bullish on the dollar for five years. With net long speculative futures dollar positions at multi-year highs, an overcrowded trade suggests a potential reversal. The consensus is shifting to fewer Federal Reserve rate cuts in 2025, supporting the dollar. If the yield curve un-inversion is an accurate predictor of a recession, which it has been, that could result in a more dovish Fed helping to weaken the dollar and lift the gold price.

Market unease around impending tariffs continues into inauguration week. As noted in last week’s silver commentary, tariff concerns have proved contagious in the precious metals markets as gold, silver and platinum have all been affected. Both gold and silver EFP premia remain elevated, and gold is flowing into COMEX inventories from other locations at record levels to take advantage of these premia. Gold inventories on COMEX have swelled by more than 6 moz since the beginning of December, including additions of 676 koz last Wednesday which was the largest one-day addition of all time. Implied lease rates for very short-term gold lending are also very high, implying that liquidity on a less than one-month delivery is very tight.

The dollar gold price rallied last week but needs to push through resistance at around  $2,725/oz to suggest that the uptrend has resumed. If not, a retest of support at $2,600/oz is possible. In euro terms, the gold price hit a new all-time high of €2,645.80/oz.

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