Fresh cash for gold spike forecast as gold price to hit $1,300.
More gold jewellery was scrapped last year than made, and the industry could be faced with another spike as gold prices are forecast to hit US$1,300 an ounce in 2010.
On delivering its annual report yesterday, precious metals analyst GFMS forecast another peak in gold prices in the second half of this year as investors return to safe-haven buying. This price spike could reignite the market’s fervour for selling gold jewellery as scrap, which GFMS said increased 27.2 percent to 1,674 tonnes in 2009.
The scrapping of gold through pawnbrokers, jewellers and newly set-up cash for gold companies reached its peak in the first quarter of 2009. Hallmarking of gold items plummeted in that period and GFMS said that more gold was scrapped in the first quarter of 2009 than was produced at gold mines.
GFMS chairman Philip Klapwijk said: “For the world to be scrapping more jewellery than it was making shows that the market was under extreme stress conditions last year caused by the financial crisis.”
Total global demand for gold rose 8.3 percent to 4,287 tonnes in 2009, representing a demand for gold as an investment, but gold used to create jewellery dropped 20 percent to 1,759 tonnes, with designers turning to other precious metals such as silver as gold prices rocketed.