Fabrication demand drops

Gold fabrication demand dipped 11 per cent last year because of a sharp drop in world jewellery fabrication, which fell 16 per cent.

Jewellery fabrication slumped by over 400 tonne in 2006, mainly on higher and volatile prices, with much of the decline taking place in the first half. The fall was more severe, as much as 40 per cent, when scrap fabrication was excluded.

According to the Gold Survey 2006 - Update II, released today in London, losses were highest in the price-sensitive regions of India and West Asia, though substantial losses were also recorded in Italy and East Asia excluding China. The sector is expected to show a slight retreat in the first half of 2007.

Other fabrication grew over 10 per cent in 2006, chiefly through higher coin and electronics demand. The fall was primarily attributed to a combination of high and volatile gold prices, especially in the first half, where bulk of losses was concentrated, with nearly every region registering falls.

Within the jewellery sector, just three countries "� India, Italy and Turkey "� accounted for more than half of the near 440 tonne fall.

The sharp fall in India last year was followed by one of the worst January-June performances on record. Italy and to a some extent Turkey were affected by weak export demand, notably in the US, where consumers shifted from plain gold to other jewellery.