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Gold Jewelry Demand Slides as Prices Rise

May 16, 2016 4:56 AM   By Rapaport News
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RAPAPORT... Global demand for gold jewelry slumped in the first quarter as the price of the metal rose and Indian jewelers went on strike, according to the World Gold Council (WGC).

Demand slid 19 percent to 481.9 tonnes in the first three months of the year compared with the same quarter a year ago. Indian demand plummeted 41 percent and Chinese demand was 17 percent lower. The two countries accounted for the vast majority of the global decline.

The price of gold jumped 17 percent from the previous quarter to $1,237 per ounce.

The sharp increase in the price of the metal deterred jewelry demand, especially in price-sensitive markets of Asia and the Middle East, the WGC said. In China, the appetite for gold was also limited by an economic slowdown.

Indian demand hit a seven-year low of 88.4 tonnes as the local price of gold advanced and the anticipation of a correction kept jewelry demand “tepid” in February. A 1-percent tax on jewelry manufacturing led to nationwide strikes that resulted in consumers being unwilling to buy at a time of uncertainty. This combination of headwinds resulted in swift and deep discounts in the local price, the WGC said.

“Jewelry demand endured a difficult quarter due to a continued lack of consumer confidence in the face of a weakening Chinese economy and a 42-day strike by jewelers in India,” said Alistair Hewitt, head of market intelligence at the World Gold Council. “But we believe Indian demand has simply been postponed, with buying likely to increase for Akshaya Tritiya and the wedding season.”
Tags: gold, Gold demand, gold jewelry demand, Jewelry, Jewelry demand, Rapaport News, World Gold Council
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