Gold jewellery consumption climbs eight per cent in 2007

In terms of gold consumption covering jewellery and investment, the tonnage increased 10.4 per cent to 348.4 for last year from 315.6 in 2006, according to a statement released by the Dubai office of World Gold Council (WGC).

It said that UAE gold jewellery consumption in the fourth-quarter dropped nine per cent to 19.3 tonnes from 21 tonnes a year ago due to high and volatile prices of gold. The drop in Saudi Arabia was 10 per cent to 22.4 tonnes from 24.6 tonnes while the other Gulf countries lost 11 per cent to 9.1 tonnes from 10.1 tonnes. "The effect of the gold price increase is worldwide and had an effect on tonnage terms from year-earlier levels," WGC said. "This trend was most keenly felt in India, the world's largest and also most price-sensitive gold market."

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It added that poor retail environment and high gold prices also made the demand for gold jewellery in the US fall by 14 per cent last year from 2006. "The Middle East showed a far less extreme as the demand was not drastically affected as the rest of the regions," it said. It stressed that China has now overtaken the US as the second-largest volume retail market for gold jewellery after India, whose demand reached 302 tonnes in 2007.

Total consumer demand for gold in China increased 26 per cent to 326 tonnes last year. Moaz Barakat, managing director of WGC for the Middle East, Turkey and Pakistan, said the gold's "safe haven and hedging characteristics" attracted Middle East investors to the commodity despite inflationary pressures and the weak dollar. "We also believe that investor interest will remain very strong in the near future and that as the price stabilises, major gold jewellery buying consumers will adapt to a higher floor in the price," he said.

WGC stressed the importance of further marketing and other promotional campaigns for gold jewellery, in order to maintain a "healthy gold market environment".

Turkey posted a record increase in demand for gold last year at 188 tonnes, up 14 per cent from 2006. In Russia, gold jewellery demand climbed 11 per cent in 2007, with fourth-quarter demand rising 25 per cent from a year earlier, making it the fastest growing country for the said quarter.