Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.


Americans' appetite for bling on fire

25 December 2013, 11:17

New York - Tumbling gold prices, growing consumer confidence and aggressive discounting by retailers have Americans flocking to jewelers' counters this holiday shopping season.

The US gold jewelry industry is on track for its highest sales for the fourth quarter since 2010 and its first annual increase in gold sales in more than a decade, precious metal consultant Thomson Reuters GFMS has estimated.

"I always look for the price of gold in the news and pay attention to discounts and deals," John Mora Gonzalez, a 31-year-old mechanic in New York, said after purchasing a necklace for his wife for Christmas. Mora had spotted J.C. Penney's 20% discount on fine jewelry, and paid $40 for a 10-karat gold necklace.

Gold prices have plunged almost a third this year, halting a 12-year run of gains. Bullion lost favor with institutional and retail investors as they braced for the US Federal Reserve to reduce its monthly $85 billion bond-buying program, moving funds to equities and other riskier assets.

Renewed consumer appetite for gold is unlikely to counteract the lack of investment dollars and reverse the downward trend for prices. But US demand is a bright spot in a global gold market where import restrictions in India have slowed buying in that country, one of the world's biggest consumers.

"bigger-ticket items"

With the US economy growing at its fastest pace in nearly two years and the unemployment rate hitting a five-year low in November, shoppers are more willing to fork out for "bigger-ticket items" during this year's critical holiday season, Dennis Marlow, who owns Solitaire Creations, told Reuters last week.

"People are saying 'Wow, gold is down. I can finally get the ring or piece of jewelry I want,'" he said.

He estimated sales in his store in Manhattan's Diamond District will rise by 15 to 20 percent this holiday from 2012.

Low prices have given big retailers more wiggle room to offer discounts to attract customers this year, jewelers said.

Jewelry sales from Thanksgiving until the new year account for as much as half of the annual total, according to estimates.

US bright spot

US gold jewelry demand in the final three months of the year will increase 15 to 20% to between 44 and 48 tonnes, Thomson Reuters GFMS expects. (US gold jewelry demand:)

The country's consumption is only one-tenth the size of China and India combined, but analysts expect U.S. demand will outpace other Western developed markets in the fourth quarter.

This year's buying spree will likely help gold jewelry win back some market share lost after Americans shunned gold as prices soared over the past 10 years. Jewelry accounts for about half of total gold demand.

Even so, fourth-quarter sales this year will be a fraction of the more than 150 tonnes seen in the same period of 2004.

Investment down

Investors have pulled over $36bn from gold exchange-traded funds, sending holdings to their lowest since the 2008 financial crisis. Institutional selling accelerated after the Fed outlined on Thursday the first concrete details of its plans to reduce the bond buying, or quantitative easing, program, that has bolstered prices.

On Friday, spot gold sank as low as $1 185 per ounce, close to a 3-1/2-year lows and down 40% from all-time highs of $1 920 in September 2011. On Monday, prices had recovered some, but remained below $1 200 per ounce, and the market is expected to remain under pressure into the new year.

Prospects for jewelry demand appear more promising if prices remain weak and jewelers continue to slash prices.

"If that's the case, I'm more likely to buy more gold jewelry," said Tara Higgins, 48, a lawyer from New Jersey who bought a $5 000 gold bracelet with diamonds on Thursday.

- Reuters


Read News24’s Comments Policy

Comment on this story
Comments have been closed for this article.

Read more from our Users

Submitted by
Victor Tinto
Raila ungrateful for my help, MP ...

An MP says that he made ODM famous in Meru and has accused the party of ungratefulness despite his hard work. Read more...

Submitted by
Victor Tinto
I'm ready for by-election today, ...

I'm ready for a by election, an angry ODM rebel MP tells Raila Odinga. Read more...

Submitted by
William Korir
ODM kicks 6 MPs out of Parliament...

ODM has kicked 6 rebel members out of house committees. Read more...

Submitted by
William Korir
Karua now headed to Jubilee?

Is Martha Karua now headed to the Jubilee Coalition? Read more...

Submitted by
William Korir
Kenneth defends move to support U...

Peter Kenneth says that moving to support President Uhuru Kenyatta and the Jubilee Party is his democratic choice. Read more...

Submitted by
S Mbinya
How to keep her interested

It is not only men who lose interest in relationships. Read more...