World Gold Council, Gold Demand Trends, Jewellery sales, gold prices, China, record high,

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Global jewellery sales to struggle in Q4 – WGC

LONDON, November 23, 2009 – Jewellery sales are likely to continue to struggle in the fourth quarter due to soaring gold prices, with the exception of China where the outlook remains cautiously positive, a quarterly report by the industry-funded World Gold Council said.
Gold hit a record high above $1,167 an ounce today as the dollar fell against a basket of currencies.
High gold prices during the third quarter were a major factor in suppressing jewellery demand across virtually all markets. The decline in gold demand was almost universal, with mainland China being the only country to register an increase in volume. The third quarter total of 473.5 tonnes is the weakest third quarter result this decade.
 

But in China, an improving economic climate aided gold jewellery demand, which was further boosted by buying ahead of the National Day holiday, marking the 60th anniversary of modern China. Demand totalled 93.5 tonnes, 8% higher than the 86.3 tonnes recorded in Q3 2008 and an outstanding 29% above the previous quarter.
Gold demand in India continued to improve during the third quarter from exceptional lows seen earlier in the year, but absolute levels of demand remained reasonably weak on a historical basis. Jewellery demand, at 111.6 tonnes, was down 42% on Q3 2008. Total tonnage was down 49% relative to year-earlier levels.
In India, the world’s largest gold consumer, the high gold price continued to be the biggest constraint on jewellery demand during Q3 2009, along with the poor monsoon, which resulted in low levels of income for the rural community. Furthermore, the southern part of the country suffered the effect of a flood, which kept buyers at bay.
Income growth generally has not kept up with the sharp rise in the gold price of the last year, and with the cost of living continuing to climb, consumers have compromised by buying lower weights. Whereas consumers buying for a special occasion would, in the past, have had a target weight in mind, a rupee budget has now become more common.
The high gold price has also seen a shift into gem set jewellery, costume and imitation jewellery in India. The fourth quarter is expected to mark a seasonal improvement in jewellery demand, the report said.

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