Record high gold prices almost wiped out imports of gold into Turkey last month, bringing the March total to the lowest ever recorded, and jewellery exports are also likely to be hit, data showed on Tuesday.
Gold imports by Turkey, the world’s third largest consumer of bullion, tumbled 95% both on a monthly and yearly basis to 675 kg in March, due to a high level of scrap gold returning to the market and causing an oversupply. In the first quarter, the country’s gold imports fell by 13.2% to 32.3 tons, figures from the Istanbul Gold Exchange showed on Tuesday. “Record high gold prices pushed consumers to sell their jewellery and when there’s too much scrap around no one needs to import,” an Istanbul-based dealer told Reuters.
World gold prices struck a record high of $1,030.80 an ounce on March 17, having gained more than 20% since the start of the year. Since then, bullion has struggled as a sell-off in commodity markets has weighed on prices. On Tuesday, spot gold was at $898.20 an ounce. In Turkey, gold is a traditional gift and is seen as a safe-haven investment in the form of coins or jewellery. During times of high prices, many consumers resell their jewellery.
The Turkish Association of Jewellers’ general manager, Metin Duyar, told Reuters last week that around 5 tons of scrap had come onto the market in the first three months of this year.
EXPORTS SEEN FALLING
In addition to the high price, crazy swings in the world gold price could also bring jewellery makers’ demand to a halt, a leading industry figure told Reuters. “High prices caused everyone to wait,” said Mutlu Oktem, secretariat-general of Istanbul Minerals and Metals Exporters’ Association. “As a result, we will probably see a 10% fall in our jewellery exports in March,” Oktem said, adding that the producers postponed buying raw material due to high prices. “They don’t want to re-stock with these high prices, so they wait,” he said.
Turkish jewelers import bullion, turn it into jewellery and then sell it abroad. The country exported 98.2 tons of gold jewellery in 2007, up 14.5% from a year earlier. High prices encourage dealers and producers to export gold in the form of bullion rather than jewellery. “We have started exporting bullion to other countries as it is now more profitable,” the gold dealer said. (Reuters)