ECONOMY

Wedding season seen offering a breather to Turk jewelry market

ISTANBUL – The start of Turkey’s season for weddings, where gifts of gold are traditional, will boost demand for the metal, but the surge may prove too brief to lift prices, industry sources said yesterday. Turkish gold consumption has been dented this year by high international prices, which touched a 26-year high in May before falling sharply. «Because of the price volatility both consumption and investment have fallen. But the wedding season is starting and retail sales could be positively affected,» Omer Halac, chairman of Istanbul Altin Rafinerisi (Gold Refinery), told Reuters. Gold coins and jewelry are traditional gifts at Turkish weddings. »Both worldwide and in Turkey there has been a significant fall in gold demand… There could be an increase with the wedding season but we won’t see a huge impact on the numbers,» said Mehmet Yagli, director of imports and exports at gold jewelry exporter Atasay. Gold imports by Turkey, the world’s second-largest gold jewelry exporter, fell 34.8 percent in volume terms in the first five months of 2006 because of soaring prices. Seventy-five percent of Turkish gold imports are used for jewelry, and jewelry exports fell 27.4 percent over the same period. Gold touched $730 an ounce in early May but yesterday was trading at $584. Foreign purchasers of Turkish gold jewelry have let their stocks run low amid volatile prices and Atasay’s Yagli said that made him optimistic for the second half of the year. «Because the stocks have been used up over the last six months, at Atasay our expectations are positive… In the second half of the year I think orders for new collections and Christmas will be positive,» he said. Istanbul Gold Bourse Chairman Vahdettin Ertas told Reuters he, too, expected lower prices to boost exports in the second half. As well as high prices curbing demand for gold, a tumbling lira has pulled traders into the currency market. The lira has lost some 20 percent of its value against the dollar since the end of April. «Grand bazaar lira-dollar trading has reduced demand for gold,» Istanbul Gold Bourse trader Gokhan Aksu said. «Because of the rise in the dollar the profit margins are better, so in the grand bazaar all the trade is focused on that.»