ECONOMY

High prices slash Turk gold demand

LONDON (Reuters) – Record high gold prices almost wiped out imports of gold into Turkey last month, bringing the March total to the lowest ever recorded, and jewelry exports are also likely to be hit, data showed yesterday. Gold imports by Turkey, the world’s third-largest consumer of bullion, tumbled 95 percent, both on a monthly and yearly basis, to 675 kilograms in March, due to a high level of scrap gold returning to the market and causing an oversupply. In the first quarter, the country’s gold imports fell by 13.2 percent to 32.3 tons, figures from the Istanbul Gold Exchange showed yesterday. «Record-high gold prices pushed consumers to sell their jewelry and when there’s too much scrap around, no one needs to import,» an Istanbul-based dealer told Reuters. World gold prices struck a record high of $1,030.80 an ounce on March 17, having gained more than 20 percent since the start of the year. Since then, bullion has struggled as a sell-off in commodity markets has weighed on prices. Yesterday, spot gold was at $898.20 an ounce. In Turkey, gold is a traditional gift and is seen as a safe-haven investment in the form of coins or jewelry. During times of high prices, many consumers resell their jewelry. The Turkish Association of Jewelers’ general manager, Metin Duyar, told Reuters last week that about 5 tons of scrap had come onto the market in the first three months of this year. Exports seen falling In addition to the high price, crazy swings in the world gold price could also bring jewelry makers’ demand to a halt, a leading industry figure told Reuters. «High prices caused everyone to wait,» said Mutlu Oktem, secretariat-general of the Istanbul Minerals and Metals Exporters’ Association. »As a result, we will probably see a 10 percent fall in our jewelry exports in March,» Oktem said, adding that the producers postponed buying raw material due to high prices. «They don’t want to restock with these high prices, so they wait,» he said. Turkish jewelers import bullion, turn it into jewelry and then sell it abroad. The country exported 98.2 tons of gold jewelry in 2007, up 14.5 percent from a year earlier. High prices encourage dealers and producers to export gold in the form of bullion rather than jewelry. «We have started exporting bullion to other countries as it is now more profitable,» the gold dealer said.