Demand for gold jewelry dropped 17 percent in tonnage terms in fourth quarter 2007 compared to fourth quarter 2006 as both the price of gold and volatility in the gold price increased. The World Gold Council's Gold Investment Digest said recently it was likely that jewelry demand also remained low in the first quarter of 2008 as both the gold price and price volatility remained high. Figures for this quarter will be released in May. The Q4 2007 drop in demand came after the value of gold jewelry spending reached a record $54 billion last year, an increase of 21 percent on the previous year. Demand increased more modestly in tonnage terms by 5 percent to 2,401 tons. India, the largest consumer of jewellery in tonnage terms, showed a 67 percent drop in demand in the fourth quarter after a 40 percent increase in the first three quarters of the year. India is typically the country most affected by price volatility, said the Digest. The Middle East was also affected by gold price volatility, although the impact was less dramatic as Saudi Arabia and the Gulf experienced a 9 percent drop in the fourth quarter, following a 16 percent increase in the first three quarters, the Diget said. Gold jewelry consumers in China were less affected as demand still increased 18 percent in the fourth quarter compared to a 26 percent increase in the first three quarters. The Digest said any long-term decline in gold jewelry demand was unlikely as sentiment toward gold remained very positive in key markets.
