Boost for Turk gold imports

ISTANBUL (Reuters) – A fall in Turkish domestic gold prices, triggered by an increase of gold scrap on the market, is fueling demand and boosting gold imports, the head of Turkey’s Gold Exchange said. But Osman Sarac said that though international prices have touched new highs recently, the effect could be short-lived and he estimated gold imports would reach 200 tons at most in 2007, almost flat on last year. An increase over the last few months of gold scrap on the Turkish market has pushed domestic Gold Exchange prices below international prices. That has prompted Turkish jewelry producers to buy more gold, in turn fueling imports. «Domestic gold prices, normally standing at $1-2 above world prices, have recently been hovering around $4-5 below prices. This is an advantage for imports,» Sarac said in an interview with Reuters on Tuesday. Gold imports to major jewelry exporter Turkey declined 28.6 percent to 192 tons last year – from a record 270 tons in 2005 – as high and volatile gold prices led buyers to put off purchases. In January this year, they jumped 44.1 percent. But spot gold prices traded at $669.25 an ounce yesterday, around seven-month highs, and Sarac said it would be difficult for Turkish gold imports to post a substantial rise this year. «Price volatility will slow down this year. But still I do not expect a huge recovery in demand as the prices are still high,» he said. «Imports may reach 200 tons this year,» he said. Gold funds Sarac also said more banks which trade on the Gold Exchange will introduce gold investment funds, in a bid to diversify instruments in this area. «We have seen the launch of Turkey’s first gold ETF (exchange traded fund) and other gold investment funds followed. This year, we will see more coming,» he said, declining to give names. Turkey’s first – and the world’s sixth – gold-based ETF started trading on the Istanbul Stock Exchange last September. Akbank «AKBNK.IS» one of Turkey’s leading private banks, also introduced a gold investment fund in 2006. Meanwhile, the Turkish Gold Exchange will move to remote access in March, Sarac said, allowing investors to trade from their offices without coming to the exchange. «We aim to facilitate gold trading and also increase the variety of investment tools in gold parallel to the examples worldwide,» Sarac said, adding that preparations for 24-hour electronic trading continued.