Worldwide gold demand fell 16% in the first quarter of 2006 as jewellery buyers were discouraged by the metal's high price, which hit 26-year peaks during the period, the World Gold Council said today.
Demand for gold in tonnage terms sank to 836 tonnes during the first three months of the year, compared with 990 tonnes in the same time last year, the London-based organisation said. That included a 22% slump in demand from the jewellery sector to 535 tonnes, according to the WGC.
Demand from investors - excluding institutional interest such as pension funds - decreased by 6%, while gold consumption from the industrial and dental sectors rose by 5%.
The fall in global consumption was 'primarily as a result of a significant fall in jewellery demand, particularly in Asia and the Middle East - a normal and predictable reaction to a volatile gold price', the WGC said in a report.
Gold prices had hit $730.40 an ounce in London trading on May 12, the highest level since 1980, as investor buying escalated amid geopolitical concerns, particularly over Iran's disputed nuclear ambitions.
Investors seek refuge in gold, which is seen as a safe store of value in times of higher inflation and political tensions. Metal prices have since slumped in profit-taking.
On the London Bullion Market today, the price of an ounce of gold stood at $666.70, up from 652.50 dollars yesterday.
