Gold Jewelry Demand in Turkey Expected to Fall 20% in 2008

Domestic gold jewelry demand in Turkey is expected to drop approximately 20 percent this year, according to Metin Duyar, general manager of the Turkish Association of Jewellers. With it, gold imports to the country will also fall, he told Reuters.

“Along with reduced demand and a decline in purchasing power, people are trading in their gold for money,” Duyar said. He added that approximately 5 tons of gold scrap metal has been recycled back into the market since January 2008.

Turkish jewelers are attributing the expected slowdown to high precious metals prices, an overall weakening of the global economy and an emphasis on diamond jewelry, instead of just plain gold.

Turkey is a major gold jewelry exporter. In 2007, gold demand in the Middle East region grew by nearly 70 tons, according to GFMS; much of this growth was driven by Turkey, which last year enjoyed both higher local and export sales.

A report released by GFMS in January said that worldwide gold jewelry fabrication in the first six months of 2008 was expected to fall by about 20 percent year over year. “And if prices continue to rise, as we expect them to,” the group’s chairman, Philip Klapwijk noted, “then the second half could be similarly affected.”