Jewellery shines in record year for gold sales By Kevin Morrison Published: February 22 2006 17:26 | Last updated: February 22 2006 17:26
Annual gold sales broke through the $50bn level for the first time last year, reflecting a rise in prices and a sharp increase in demand from investors, jewellery and industrial users, according to the World Gold Council, the industry group representing gold miners.
However, increasing gold price volatility at the end of 2005 led to a 15 per cent drop in fourth-quarter gold jewellery sales.
The subdued tone has extended into 2006 as large swings in the gold price have put off some buyers in India and the Middle East, which together account for more than half of annual gold sales, the council said.
“Prices increased steadily for most of last year and that was accompanied by increasing demand, which is encouraging. But the increased price volatility from the end of the year has affected jewellery sales,” said Philip Olden, managing director of marketing and jewellery at the WGC.
The council said gold sales rose 16 per cent to $53.6bn for the 2005 year, with industrial, jewellery and investment demand rising by between 11 and 37 per cent on 2004. Sales were boosted by a 9 per cent increase in the average price of gold for the year to $444.45 a troy ounce.
The $39bn in gold jewellery sales reflects the price paid by the jewellery fabricators, and not the retail price paid by consumers. Mr Olden said retail gold sales were closer to $80bn.
Gold reached a 25-year high of $574.60 a troy ounce earlier this month, and was trading at $552 yesterday, about $100 higher than on November 1.
Gold demand measured by volume rose by 7 per cent to 3,754.3 tonnes with jewellery accounting for about 2,736 tonnes, up 5 per cent on the previous year, but still 17 per cent below the record 3,300 tonnes in jewellery sales in 1997 when the average gold price was $331.29, according to GFMS, the precious metals consultancy.
Gold jewellery sales again exceeded total annual gold mine output. 2003 was the only year in the past eleven years that gold mine production exceeded jewellery sales.
Increased central bank selling reflected the first full year of the renewed Central Bank Gold Agreement, which allows the signatories, all European central banks, to sell a maximum of 500 tonnes a year, up from 400 a year in the previous five-year agreement, which ended in September 2004.
The near 50 per cent rise in the gold price over the past two years has been partly driven by investor demand.
The WGC said total gold investment demand rose 37 per cent to 8,568 tonnes last year or more than double the 2003 level with a significant part of this increase coming through the launch of gold backed investment products listed on stock exchanges, otherwise known as Exchanged Traded Funds (ETFs).
Market Data 
Markets 
AI
