In British English we use the spelling "Jewellery", whereas American English uses "Jewelry". In Canada both variants are found.

These words are derived from the occupation of "Jeweller" and "Jeweler" respectively by following the pattern of using the suffix -y for something associated with a particular trade (for example baker/bakery, fisher/fishery).

Jeweller and Jeweler in turn are the occupation based on the word "Jewel" where British English doubles up the l and American English doesn't (compare model/model(l)ing, travel, travel(l)er).

According to wikipedia, jewel is based on the old French word "jouel" from around the 13th century. Earlier roots are harder to find - possibly Middle Latin "jocale" from Eary Latin "jocus" meaning "pastime, sport" (which is where we get the word "joke").

Derived terms include bejewel, jeweller, jewelled, jeweller, jewelry and jewellery.

Modern French now has the words joaillerie and bijoux to mean jewellery.

This confusion lends itself to a plethora of misspellings including jewellry.