Jewellery sector cuts back on gold

The World Gold Council has reported that demand for gold from the jewellery sector decreased in the fourth-quarter of 2007.

In its latest Gold Investment Digest, the council states that the ongoing turmoil in the global financial markets has most probably “hampered” demand.

Poor sales have been reported from India’s major gold jewellery buying event, the Diwali festival; sales in the southern regions of the country, where the market is very sensitive to price, were significantly lower.

However, the Council predicts that demand will recover once gold prices stabilize. Given that gold reached an average of $786.25 oz in the fourth quarter, the digest observes that “the dollar value of jewellery spending is likely to have continued to increase”.

Jewellery demand remained high throughout most of 2007, reaching 1810 tonnes in the first three quarters of the year, an increase of 15% over the same period in 2006.

During the nine month period, industrial and dental demand remained roughly static, at 348.3 tonnes. The largest industrial use of the metal was in electrical components.

Industrial demand could increase in the coming year and the automotive sector is an area where usage is expected to rise.

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