Gold Jewelry Demand Reaches $14.5 Billion

Dollar demand for gold in the jewelry, retail investment, and industrial sectors all reached new heights in the second quarter of 2007, according to the World Gold Council. Global demand for gold jewelry showed the strongest surge, reaching a record $14.5 billion, 37 percent higher than the second quarter of 2006, with particular strength in China, India, the Middle East, and Turkey.

A return to more normal levels of gold price volatility, growing acceptance by consumers of a price that averaged 6 percent above the same period a year ago, and strong economic performances in the key consuming regions all helped gold to set records in the second quarter, according to Gold Demand Trends, released today by the World Gold Council (WGC).

In tonnage terms, India, the world’s largest gold market, achieved all-time records in both jewelry and retail investment, WGC said. Turkey achieved second-quarter records for both categories while Russia recorded its highest ever level of jewelry demand.

The figures, compiled for WGC by GFMS Ltd, showed that identifiable gold demand made a further substantial recovery in the second quarter of 2007 from the impact of the volatile prices experienced in 2006, rising 19 percent in tonnage terms compared with the second quarter of 2006 to 922 tonnes, and reaching $19.8 billion, a 27 percent increase, in value terms year-over-year.

“We are pleased to report a very strong second quarter with demand for gold reaching unprecedented levels in a number of markets,” said James Burton, WGC chief executive officer. “A reduction in price volatility in 2007 has resulted in increased consumer confidence and, coupled with greater industry marketing activity, led to record levels of gold jewelry purchases globally in dollar terms. I am pleased to note that the dollar value of gold demand has more than doubled in just four years.”

He added, “The figures from India this quarter are particularly pleasing and we will continue to encourage India‘s ongoing love affair with gold.”

At 317 tons, India’s total demand for gold in the second quarter was equivalent to half the global mine output for the quarter. More stable gold prices, a booming economy, and the increasingly successful Akshaya Thritiya festival in April all contributed to a strong second quarter despite prices being in the mid-$600s per ounce, WGC said.

Strong economic growth, reduced price volatility, and the auspicious Year of the Golden Pig saw China’s gold demand increase 32 percvent in tonnage terms from year-earlier levels to 76 tons, WGC said. 

In the Middle East, strong economies and stable prices influenced demand for gold which rose 20 percent in tonnage terms to 97.5 tonnes compared with the same quarter in 2006, according to WGC. Turkey enjoyed second-quarter records for both jewelry, at 52.2 tons, and net retail consumption, at 20.5 tons, an increase of 14 percent and 5 percent respectively on the previous year. 

In Russia, where jewelry demand has grown steadily over recent years, consumption in the second quarter increased by 27 percent to 20.3 tons year-over-year.

Globally, net retail investment in the second quarter rose by 51 percent in tonnage terms to 132.9 tons, and 60 percent in dollar terms to $2.9 billion, year-over-year. Total identifiable investment fell just 4.8% in tonnage terms to 130.4 tonnes and was 1 percent higher in dollar terms at $2.8 billion year-over-year.