Investors bought more gold than buyers of jewellery for the first time in three decades in 2009, highlighting the increasing impact of speculators on bullion prices.
GFMS, the consultancy that compiles benchmark supply and demand data on the metal, tiffany jewelry yesterday said that investment demand doubled to 1,820 tonnes last year, while jewellery purchases fell 23 per cent to 1,687 tonnes, a 21-year low.
The data provide the clearest indication of the big role investors played in driving gold to a record high of $1,226.10 a troy ounce in December.
Philip Klapwijk, executive chairman of GFMS, told the Financial Times he sensed that a “large amount of money” was poised to enter the gold market this year. He predicted a “bumpy” return to record prices by the summer on the back of loose fiscal and monetary policies and US dollar weakness.
Mr Klapwijk warned that although investors could buy more gold this year, the market would become “increasingly vulnerable” to a big correction when the circumstances favouring investment disappeared.
“As the macroeconomic environment gradually normalises, the gold market’s dependence on investment will become all too apparent with a substantial price retreat at that point on the cards,” Mr Klapwijk said.
The surge in gold prices, from $250 an ounce in 1999 to last year’s record, has depressed tiffany money clips jewellery sales, traditionally the backbone of consumption. Gold was trading yesterday at $1,128 a troy ounce.
The global economic crisis has also affected demand, particularly in India, the world’s largest buyer.
GFMS said jewellery demand had fallen by almost half since reaching a peak of 3,294 tonnes in 1997.
Traders said gold prices need to drop below $1,000 an ounce to ensure a revival in jewellery demand, as the currencies of key consuming countries such as India and Turkey depreciate against the dollar, increasing the local cost of bullion.
On the supply side, China cemented its position as the world’s biggest gold producer. A further fall in South Africa’s output, down 5 per cent on the year, saw it relegated to third position behind Australia. It had been the top producer for more than a century until 2007.
In total, global mine supply rose 6 per cent to 2,553 tonnes, a six-year high, helped by a tiffany pendants jump in output from Indonesia.
Net sales from central banks dropped 90 per cent to 24 tonnes in 2009, the lowest level in more than two decades.
Investors outshone jewellery buyers in gold rush of 2009
Investors bought more gold than buyers of jewellery for the first time in three decades in 2009, highlighting the increasing impact of speculators on bullion prices.
GFMS, the consultancy that compiles benchmark supply and demand data on the metal, tiffany jewelry yesterday said that investment demand doubled to 1,820 tonnes last year, while jewellery purchases fell 23 per cent to 1,687 tonnes, a 21-year low.
The data provide the clearest indication of the big role investors played in driving gold to a record high of $1,226.10 a troy ounce in December.
Philip Klapwijk, executive chairman of GFMS, told the Financial Times he sensed that a “large amount of money” was poised to enter the gold market this year. He predicted a “bumpy” return to record prices by the summer on the back of loose fiscal and monetary policies and US dollar weakness.
Mr Klapwijk warned that although investors could buy more gold this year, the market would become “increasingly vulnerable” to a big correction when the circumstances favouring investment disappeared.
“As the macroeconomic environment gradually normalises, the gold market’s dependence on investment will become all too apparent with a substantial price retreat at that point on the cards,” Mr Klapwijk said.
The surge in gold prices, from $250 an ounce in 1999 to last year’s record, has depressed tiffany money clips jewellery sales, traditionally the backbone of consumption. Gold was trading yesterday at $1,128 a troy ounce.
The global economic crisis has also affected demand, particularly in India, the world’s largest buyer.
GFMS said jewellery demand had fallen by almost half since reaching a peak of 3,294 tonnes in 1997.
Traders said gold prices need to drop below $1,000 an ounce to ensure a revival in jewellery demand, as the currencies of key consuming countries such as India and Turkey depreciate against the dollar, increasing the local cost of bullion.
On the supply side, China cemented its position as the world’s biggest gold producer. A further fall in South Africa’s output, down 5 per cent on the year, saw it relegated to third position behind Australia. It had been the top producer for more than a century until 2007.
In total, global mine supply rose 6 per cent to 2,553 tonnes, a six-year high, helped by a tiffany pendants jump in output from Indonesia.
Net sales from central banks dropped 90 per cent to 24 tonnes in 2009, the lowest level in more than two decades.