×
By
Reuters
Published
Jan 20, 2009
Reading time
2 minutes
Share
Download
Download the article
Print
Click here to print
Text size
aA+ aA-

Global recession to dim Turkey's 2009 gold demand

By
Reuters
Published
Jan 20, 2009

By Humeyra Pamuk

LONDON, Jan 20 (Reuters) - Turkish physical gold demand could remain sluggish in 2009 as high and volatile world gold prices and the global economic slowdown deter customers, traders and producers said on Tuesday.



Gold imports by Turkey, one of the top three consumers of bullion, dropped 30 percent in 2008, while its gold jewellery exports fell around 14 percent.

Spot gold rose to a record high of $1,030.80 an ounce in March last year -- a factor which traders cite for the high level of scrap coming back to the market and dampening demand for imports.

When the gold price rallies to a new high, scrap levels tend to rise as customers sell back their jewellery and take profits.

Consumers' reluctance to spend as the global recession reduces global liquidity is another factor which cut demand in 2008, traders said.

"We can say that all these factors are still there," said Gokhan Aksu, financing manager at Goldas Kuyumculuk (GOLDS.IS), one of Turkey's top jewellery producers.

"Towards the summer we could see demand pick up seasonally ... but it does not look possible this year to match the import figures of last year," he said.

Turkey's gold imports stood at 166 tonnes in 2008, compared to 230.8 tonnes in 2007 and a record 270 tonnes in 2005. In November, imports tumbled to their lowest monthly level of 15 kg as demand dried up.

"We have seen the impact of the global crisis, though only slightly," Aksu said. "The fall in the sales of refined gold (jewellery) caused demand for bullion to drop, which in turn removed the need to import bullion from abroad," he said. In addition, a sharp fall in the Turkish lira against the dollar was another factor deterring customers as a stronger U.S. currency made bullion more expensive for locals.

Jewellery exports from Turkey, one of the world's top gold jewellery exporters, fell to 83 tonnes from 96.3 tonnes in 2007.

"We've had a very problematic year," said Oguz Ozdemir, export manager at Favori, a leading jewellery producer and exporter in Turkey. "The orders stopped very sharply in the last quarter, where sales normally could be higher than the rest of the year due to Christmas," he said.

Global recession in the world has stopped demand, Ozdemir said, causing some clients to default on payments and return the jewellery instead.

"I hear that Vicenza fair was very quiet," he said, referring to a jewellery fair in Italy a couple of weeks ago. "The orders we have received this year were 25 percent below last year," he said.

The impact of the recession was mirrored in the exports figures to the United States. A major market for Turkish jewellery, sales to the U.S. have dropped by 54 percent. "The wholesalers and chain stores in the States have either stopped buying or have brought their purchases down to a minimum," Ozdemir said. (Editing by Peter Blackburn)

© Thomson Reuters 2022 All rights reserved.