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Thursday, 30th March 2006 (7426 views)

Demand for ornamental gold items is set to bounce back by the end of the year despite the precious metal's soaring market price, which has seen interest in buying the jewellery drop, says CPM Group.

The New York-based precious metals consultancy firm reported that Indian jewellers were expecting between a five and ten per cent decline in demand during the year.

Other commentators agree that this represents a fair barometer of global trends. The Indian economy has the largest single share of worldwide gold jewellery sales and ornamental retail itself makes up nearly a third of the annual overall gold market.

The head of CPM Group, Jeffery Christian, said that despite this regression, Indian commentators were confident of a reprieve.

"They do not think that the bearishness will persist," he told Mineweb.net. "They are finding that there is greater interest in buying gold jewellery even at higher prices."

He went on: "More investors have bought more gold for a longer period of time [than anything else] in the history of mankind, and that is the single most important reason why the price of gold is as high as it is."

Some commentators attribute gold's high price to new products that make investment in the market easier, such as Exchange Traded Gold Funds.

Gold EFTs account for almost 438 tonnes of the precious metal worldwide and have made it easier for investors to buy into gold since their inception in the last few years.

 

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