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15% Decline in Global Gold Jewelry Demand, forbes.com
 
Date: Sep, 08 2012
 

Worldwide gold jewelry demand fell 15 percent, year-over-year, to 418.3 tons for the second quarter of 2012, largely due to a sharp decline in Indian jewelry demand, according to the World Gold Council. Gold jewelry accounted for 42 percent of global gold demand during the second quarter.

At $21.6 billion, the value of global jewelry demand was 9 percent below year-earlier levels, according to Gold Demand Trends, the quarterly report on the gold industry by the WGC. Declines were reported in nearly all geographical markets.

Indian demand for gold jewelry in the second quarter of 2012 fell by 30 percent to 124.8 tons amid record high local currency gold prices as depreciation in the rupee against the US dollar. In local currency terms, the value of Indian jewelry demand was 10 percent down on the year-earlier period.

“A number of factors combined to create an unsupportive environment for gold jewelry demand in India during the quarter,” the WGC said. “They include: Slowing GDP growth; record high local gold prices caused by currency fluctuations; stubborn domestic inflation; high interest rates, and fears of a poor monsoon season.”

Meanwhile in China, gold jewelry demand dropped 9 percent, year-over-year, to 93.8 tons as Chinese consumers were discouraged by the slowing of GDP growth in the country during the second quarter as well as by the lack of a clear trend in the gold price, WGC said. “Demand for wedding jewelry was resilient, aided by 2012 being the auspicious Year of the Dragon, and jewelry demand as a whole was concentrated in the 24-carat gold segment, while 18k jewelry bore the brunt of the year-on-year decline in demand.” Steady growth in Chinese gold jewelry demand is expected to resume in the third quarter.

The rate of decline in jewelry demand in the US slowed once again, WGC said. Demand was down 7 percent in the second quarter, year-over-year, compared with a 9 percent drop in first quarter. Demand in value terms was virtually unchanged, 1 percent lower, at $1 billion.

“The decline was partially a result of the weak domestic economic situation combined with international economic unease as a continuation of the high unemployment rate and overall economic distress cut into non-essential purchases during the second quarter,” WGC said. “Although demand among higher end consumers was slightly more robust, there were emerging concerns from this segment regarding the uncertainty around tax policy and regulations brought about by the upcoming elections.”

The signs are, however, “cautiously optimistic” for the remainder of the year, WGC said. The period of consolidation in the gold price in the second quarter saw consumers who had been discouraged by previous price volatility returning to the market. Read full story


Source of the News
   
Source Title http://www.forbes.com
Source Date Sep, 08 2012
Source Description

http://www.forbes.com

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