Commodity Online
JOHANNESBURG : The World Gold Council on Monday said the demand for gold jewellary down 21 percent in the second quarter this year compared to same period last year.

In a report published in its Gold Investment Digest, the WGC said although jewellery demand recovered from the depressed levels of the previous quarter to reach 504.5 tunes in the second quarter, it was still significantly lower than it was in the same quarter a year earlier.

The primary factor driving demand lower during the quarter was the gold price. The volatile price had the most notable effect in India, the world's largest market for gold jewellery, the WGC said.

Demand was also hampered by inflation, which had started to spread across the globe and slowing economic growth in many countries. Consumers were finding their disposable incomes increasingly constricted by rising household costs as food and fuel prices spiraled, said the WGC.

However, the WGC said there had been a strong revival in Indian demand in the third quarter and widespread reports of shortages of gold in the retail sector.

Meanwhile, second quarter demand for gold in industrial and dental applications showed a modest decline on second quarter 2007, falling 5% to 111.8t, said the report.

sharp economic downturn in the United States, coupled with rising global inflation and a weaker global economic outlook led to lower consumer spending on non-essential items, which helped to explain the lower demand in this sector, the report added.

Mine production also declined by a further 4% year-on-year in the second quarter to 590t bringing production in the first half of the year to 1,133t - 6% lower than production in the first half of 2007, the WGC said.

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