ECONOMY

Turkey’s gold imports set to stay high despite strong rise in prices

ISTANBUL – Rising gold prices will fail to slow imports by Turkey, where demand is shaped by jewelry exports rather than world bullion prices, sector officials said yesterday. Turkey is the world’s second-largest jewelry exporter after Italy, whose exports have been declining in recent years due to competition from countries like Turkey, India and China. Geopolitical tensions, oil-fueled inflation worries, prospects of greater Chinese demand and reports that Russia, Argentina and South Africa have decided to raise the amount of gold in their reserves have boosted gold’s safe-haven appeal this year. Gold topped $500 an ounce on Tuesday for the first time since December 1987. After hitting a high of $502.30, it fell below $500 on profit-taking. «Most of our export markets are not affected by rises in world prices,» said Murat Akman, general manager of World Gold Council Turkey. «In markets like our biggest export market, the United States, the price of raw material makes up a very small portion of the final product’s value. So a rise in raw material prices does not affect consumer demand,» he said. Turkey’s gold imports reached an all-time high in 2004 at 250 tons. This year imports rose 14.8 percent to 244.4 tons in the first 10 months. «The rise in Turkey’s gold imports is very much related to domestic demand and jewelry export performance,» said a trader at the Istanbul Gold Bourse. «World prices do not have much impact on shaping bullion demand. Gold is not a very common financial instrument in Turkey as it is in international markets,» he said. Turkey imports bullion from Switzerland, Luxembourg and South Africa. One third of Turkey’s jewelry sales are to the US, with most of them in the fourth quarter, which includes the Christmas season. According to WGC data, Turkey’s jewelry exports reached 228 tons in the first 10 months of 2005, up 10 percent. Akman said Italy was trying to maintain export revenues with more innovative designs and luxury products, but that its exports were expected to continue to fall.