US Recovery "Could Boost Gold Jewelry Buying"

DEMAND for buying gold jewelry in the United States totaled 18.8 tonnes in the first quarter of 2013, a year-on-year increase of 6%, marking the first such increase since Q3 2005, figures published Thursday in the World Gold Council's quarterly Gold Demand Trends show.

The report from the gold industry's market development organization adds that economic recovery may also prove to be a positive factor for US gold jewelry demand, which was negatively affected by the economic downturn.

"While the top-end of the US jewelry market has been relatively impervious to the economic hardship of recent years, the mass retail and lower-end of the market has suffered considerably," the report says.

"Declining demand has been indicative of weak consumer sentiment against a background of relatively high unemployment, falling real wages and rising gold prices...as economic sentiment improves, however, gold demand appears to be following suit."

The report suggests that the first year-on-year increase since before the global financial crisis started may represent an "inflection point" for US gold jewelry demand.

"Lower-end jewelry demand appears to have experienced something of a paradigm shift in recent quarters as retailers in this space report a core demand for gold among their customer base," the report says.

"The fact that gold-plated silver items has been growing as a category is further indicative of a strong underlying desire for gold jewelry, which is highly negatively correlated to price in this segment of the market. As US data shows tentative improvements in consumer confidence and continued recovery in the housing market, gold jewelry demand may respond in kind."

The World Gold Council also notes that the motivation of Americans for buying gold jewelry may be changing.

"Anecdotally, US consumers appear increasingly to be viewing gold jewelry through a quasi-investment lens, with a focus on 'heirloom' pieces that can be gifted and passed on."