JOHANNESBURG (Business Day) -- The quantity of gold jewellery sold by consumers in India and the Middle East has been surprisingly low considering the rising gold price, researchers Neil Meader and Cameron Alexander of London-based metals consultancy GFMS Ltd. say in the group’s latest newsletter.
Consumer sales of gold jewellery for melting and refabrication, dubbed scrap, usually rise, particularly in price-sensitive regions such as India and the Middle East, as the gold price climbs.
Gold has remained in a range of $790/oz to $800/oz in the past two weeks, but it reached a peak of $845.50/oz early last month.
Meader and Alexander said there had been more scrap sales in the developed world than in the developing world since the gold price started to surge in mid-August.
In 2003, the average volume of scrap sold in India was about 30 tonnes a quarter, but this year it is less than 20 tonnes.
“The most simple explanation appears to be that, as expectations of higher (and ever higher) prices have taken hold, consumers have reduced the amount of old jewellery they are willing to sell back,” Meader and Alexander said.
In the Middle East, the source of scrap has been distributors offloading slow-moving stock more than individuals selling.
Although sales of jewellery from industrialised nations have responded more positively to the higher gold price, overall scrap has been less because there has been less of a clear-out from the trade than there was last year.
