Italian Gold Jewelry Demand Down 30% in Q108

The first quarter of 2008 saw a 30 percent drop in the amount of gold jewelry purchases in the Italian jewelry sector, a result of declining consumer demand, Ivana Ciabatti, the head of Italian precious metals trader, Italpreziosi, told Reuters.

Ciabatti attributed the drop in demand to economic and financial uncertainty and to the fact that gold is “not a primary necessity.” “The situation in Italy in the first quarter [was] very dramatic,” she noted, although she expressed hope that the situation would improve in the second quarter if the price of gold became more stable.

In times of past economic unease, Italians have preferred to invest in gold bullion rather than jewelry, Ciabatti explained, although old jewelry is often sold off by poorer people to raise quick cash. “People don’t trust other investments, and gold has returned to be a safe haven investment (in the recent past),” she said.

Those familiar with the Italian market argue that it is the manufacturers who are hurt first and hardest by steadily rising precious, due to buyers putting off orders as they wait to see if prices will stabilize.

A manager of Italian gold and steel jewelry manufacturer Ka-ti commented, “The sector is in crisis. With gold prices as they are now, people are not buying.”

The price of gold has been rising rapidly since the beginning of the year, although it has fallen approximately 7 percent in the past week to less than $900 per ounce, a result of a strengthening of the dollar against the euro. Gold passed a record $1,000 per ounce in mid-March.