Gold was also seen as benefiting from concerns over the solidity of other assets, be it cash at a time of bank failures and equities as we head into a possible recession. The consultancy views golds fundamentals as relatively neutral in the near term, with the damage from weak demand being largely neutralised by restrained supply, Philip Klapwijk, executive chairman, GFMS, said.
Given expectation of higher prices and a poor economic outlook, it is not surprising that we are forecasting lower jewellery fabrication in every region in the first half of this year. In fact, if we take the comparison back further and look at the first half of 2007, jewellery fabrication then was 400 tonnes higher than our prediction for the first six months of 2009, he added.
The report also revealed that world jewellery fabrication fell by a hefty 11% or 262 tonne in 2008, which took the total to its lowest level since 1989, mainly owing to heavy losses in India, Turkey and Italy.
Klapwijk explained, An 11% drop may sound restrained to some, but demand in the first half of 2008 was fairly feeble and the actual tonnage were proposing for this year could easily be a 20-year low. Jewellery fabrication (including scrap) in just four countries, India, Italy, Turkey and the US, accounted for 69% of the gross decline in 2008, report stated. India, the largest and traditionally price-sensitive market, witnessed the greatest fall in 2008.
In particular, the sharp drop in jewellery consumption in the US, not only affected the countrys jewellery manufacturing, but also was an important reason for the fall in th Italian offtake, which is estimated to have dropped by around 18%. A significant and positive sign was the growth in Chinese fabrication, which grew for the sixth year in succession.
in the process setting a new record in excess of 300 tonnes.