China Mineral Company Reports: Jewelry Demand Not Slowing Due to Rising Gold Prices
Gold prices have exceeded expectations by comfortably rising above $1,000 an ounce, and traditional buyers in the jewelry market are facing a new reality: higher prices are here to stay. “We might not see gold below $900 again,” predicted Tad Brooks, a senior analyst at China Mineral Company.
Some analysts at China Mineral Company say they expect gold prices to gradually march higher in 2010, regardless of periodic corrections. A rise in investment demand on inflation expectations and for currency diversification purposes has more than offset the weakness in the jewelry sector with overall gold demand in the first half at 1,744 tons, compared with 1,520 tons in the first half of 2008, according to China Mineral Company, citing a GFMS data sheet. According to GFMS data, global jewelry demand held fairly steady during the last bull run, dropping only 10% to 2,404 tons in 2007 from 2,680 tons in 2002, despite prices increasing by 200% over the same period.
A positive pattern was evident during China’s golden week holidays when jewelry demand was stronger than in previous years. “Even with the price higher, Chinese investors continue buying gold,” said Peter Lim Fung, head of dealing at Wing Fung Precious Metals in Hong Kong.