Gold jewellery demand grew by a robust 240 tonne or 23% year-on-year in the first half of 2007 due to substantial demand from the Indian and Middle East markets, the GFMS said in an update of its Gold Survey 2007 Update-I on Thursday. India accounted for more than 70% of the rise in jewellery demand, while East Asia and the Middle East also saw sizeable gains.
The second-half could also see a further increase though that will depend strongly on the scale and timing of any gold price rally. Average gold prices could rise to $690 an ounce in the second half of 2007 and further gains were likely in 2008, report said.
?We would certainly factored in scope for a price rise on the back of US subprime contagion fears, but the recent price move, which perhaps came a little earlier than we were expecting, may leave the jewellery industry with a strong sense of unease,? said Philip Klapwijk, executive chairman, GFMS. ?Jewellery fabrication could grow by 6% year-on-year in the second half,? he added.
The consultancy feels that the key driver of the increase in jewellery demand was greater price stability, particularly in the second quarter when price volatility fell to 12% from 31% in 2006.