Report predicts drop in jewellery fabrication

Global gold jewellery fabrication could fall substantially this year, according to the world's leading precious metals consultancy, GFMS.
Global gold jewellery fabrication could fall substantially this year, according to the world’s leading precious metals consultancy, GFMS.
Speaking at the London launch of the consultancy’s annual report on the international gold market, Gold Survey 2009, GFMS chairman Philip Klapwijk said the economic slowdown and rising gold prices would have a negative impact on jewellery fabrication.
“Already in 2009, GFMS has witnessed a sizable slump in jewellery offtake as economic uncertainty and elevated gold prices continue to impact on end-user demand.”
He said the gold price could easily re-attain the US$1000 mark and might even break through the US$1100 barrier in the coming months.
“The price may have pulled back a fair bit from the February highs but that was largely just the market’s reaction to jewellery demand crumbling and scrap booming,” he said.
“It’s far from game over for investors and it will be that crowd which sets the price alight”.
The Gold Survey 2009 report found that global jewellery fabrication declined by around 10 percent or almost 250 tonnes in 2008. In terms excluding scrap, 2008’s decline was event steeper at almost 20 percent.
According to the report, record and volatile gold prices, combined with a deteriorating economic environment, were the key drivers for this marked affect on the jewellery market.
The analysis in Gold Survey 2009 reveals that the decline in jewellery fabrication demand was not limited to just historically price sensitive regions with western markets also suffering a significant downturn.
“Nonetheless, India remained the chief architect of the global decline with offtake from the world’s largest gold market slipping almost 100 tonnes on price pressures while jewellery fabrication in Italy fell by almost a fifth, the tenth consecutive year of contraction that has seen fabrication volumes fall to roughly a third of the peak of 1998,” the report said.
“Elsewhere, demand in the Middle East slipped around 10 percent, with the bulk of the fall attributable to Turkey due to a slump in the local economy and a significant rise in the local price due to currency weakness.”
The report concluded that the only obvious positive last year was the modest rise in Chinese jewellery fabrication which was driven largely by robust local consumption and a rise in the renminbi coupled with a significant surge in investment driven purchases.
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