Demand for jewellery jumps as gold bars dip

Photo: Brandonnguyen

Demand for gold fell 19 per cent overall in China in the first half of 2014, according to the China Gold Association. The country, the world's biggest consumer of gold, has seen interest in Bars plunge 62 per cent, a decline offset by an 11 per cent rise in demand for jewellery.

The same trend has been observed in India. Silver and gold jewellery exports have soared 25.06 per cent and 24.96 per cent respectively in June 2014 year-on-year, according to the Gems and Jewellery Export Promotion Council (GJEPC).

At the same time, exports of other alternative commodities, such as coloured gemstones and pearsl have tumbled, with gold medallions and coins suffering a decline of 8 per cent.

Zhang Bingnan, vice-chairman and general secretary at the CGA attributes the dip in interest to unrest in Ukraine and the Middle East, which, while often stimulating global interest in alternative safe havens, is thought to have hurt consumption in China.

Nonetheless, the China's increasing population, which is becoming increasingly wealthy, is expected to fuel a rise in demand of approximately 25 per cent in the coming four years.

Victor Thianpiriya, commodity strategist at Australia & New Zealand Banking Group Ltd., also notes that the markets for jewellery and gold Bars are different in nature:

"Demand was very strong last year and not something people expected to be repeated this year. The investment bar side tends to be more speculative and price sensitive, while jewelry is pretty static,” he told Bloomberg.