Italy jewellery Q1 gold demand seen down 30%
Gold purchases by the Italian jewellery sector, Europe’s biggest, have fallen by about 30% in the Q1 due to weak consumer demand, the head of Italy’s leading precious metals trader said on Tuesday.
“The situation in Italy in the first quarter is very dramatic,” said Ivana Ciabatti, head of Italpreziosi. “People feel economic and financial uncertainty and because gold is not a primary necessity there was a fall in jewellery sales in Italy,” Ciabatti told Reuters in an interview. “As a consequence, there was a fall in gold purchases by jewelers of about 30% in the first three months of this year,” she said on the sidelines of a jewellery fair in Arezzo, a major center of mass market jewellery manufacturing. She said she hoped the situation would improve in the Q2 if gold prices stabilized. Prices surged above $1,000 per ounce earlier this year before falling back.
Gold tumbled to a two-month low below $900-an-ounce on Tuesday as a dollar rise against the euro dampened its appeal as an alternative investment. Italian jewellery sector experts say gold price volatility is more harmful for the manufacturers than steadily rising prices because buyers tend to put off orders to wait for the situation to stabilize.
Participants of the Arezzo fair, a showcase of Italian mass market jewellery, said their segment was hit harder by jumping prices and sour consumer sentiment that high-end jewellery. Mass-market clients were more price conscious than the well-heeled clientele of exclusive designers, they said. “The sector is in crisis. With gold prices as they are now, people are not buying,” said a manager at small-size Italian manufacturer of gold and steel jewellery Ka-ti.
Export-focused jeweler Aurora has seen sales fall over the past few years to 3 tons a year from 5 tons, said its managing director Fosco Gallina. Ciabatti said, that in times of economic trouble, Italians prefer to invest in gold bullion rather than jewellery, while poorer people have to sell old jewellery to make ends meet. “People don’t trust other investments, and gold has returned to be a safe haven investment (during the few last months),” she said, adding that the volume of bullion purchases was too small to offset the fall in gold jewellery purchases. Gold scrap sales have increased in Italy over the past couple of years as some people cashed in on the metal price rally by selling old jewellery, some participants at the fair said, but they could not quantify the increase. The flow of recycled jewellery into Arezzo rose swiftly in 2007 and precious metals recycling points have mushroomed in the past few years, said one fair participant who declined to be named. (Reuters)
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