Global jewelry fabrication in 2008 declined by around 10 percent or almost 250 tons, according to a report on the precious metal released Tuesday.
The bulk of the loss was attributable to the slump of in the first half of the year, which offset a near 10 percent rise in the third quarter and near stability in the fourth quarter, according to Gold Survey 2009, published by GFMS, a London-based precious metals consultancy.
Record and volatile gold prices, combined with a deteriorating economic environment, were the key drivers for this marked affect on the jewelry market, according to the report. When excluding scrap, which gives a clearer indication of the health of the international gold market, 2008’s decline was steeper at almost 20 percent.
The decline in jewelry fabrication demand was broad, according to the report. India, the world’s largest gold market, led the decline with jewelry fabrication demand down by almost 100 tons. Meanwhile, jewelry fabrication in Italy fell by almost 20 percent, the tenth consecutive year of contraction that has seen fabrication volumes fall to roughly a third of its peak of 1998. Elsewhere, demand in the Middle East slipped around 10 percent, with the bulk of the fall attributed to Turkey due to a slump in its local economy and a significant rise in local price due to currency weakness.
Only China saw a modest rise in jewelry fabrication, in the process establishing yet another record, firmly placing the country as the world’s second largest market, according to the report. The increase was driven largely by robust local consumption and a rise in the renminbi, coupled with a significant surge in investment driven purchases.
Losses elsewhere across East Asia where comparatively restrained, according to the report.
Looking ahead, price and economic recovery will remain the key drivers in determining the performance of global jewelry fabrication markets, according to the report. GFMS said it has witnessed a sizable slump in jewelry demand so far this year as economic uncertainty and elevated gold prices continue to impact on end-user demand.
Philip Klapwijk, GFMS’ executive chairman, who delivered the annual findings in London, said that global jewelry fabrication could fall substantially in 2009, given the current economic climate. GFMS predicts that gold prices will challenge the $1,000 mark again this year, and may likely past that mark.