As a side note, this increase in Gold demand may weaken Asian currencies further as Gold imports are quoted in USD, resulting in a worsening trade balance.
Gold jewelry demand in Indonesia is set to expand to a four-year high as consumers in Southeast Asia’s biggest buyer join India to China in increasing purchases as prices slump and the middle class expands.
Consumption of necklaces, bracelets and rings will probably climb to 40 metric tons this year, according to Iskandar Husin, secretary-general of the Indonesian Goldsmiths and Jewelers Association. That’s a 30 percent increase from 30.8 tons in 2012, and the most since 41 tons in 2009, data from the London-based World Gold Council show.
Gold fell into a bear market in April as haven demand waned and sales from exchange-traded products reached a record, spurring increased buying from India to China, the world’s two biggest consumers. President Susilo Bambang Yudhoyono forecast a jump in per capita incomes this month even as stocks dropped and the rupiah tumbled. Southeast Asia’s largest economy has more than quadrupled in the past 10 years to $878 billion.
“Gold jewelry is all about lifestyle and saving,” Husin said in an interview in Jakarta. “It’s a market driven by the increase in GDP and modern Indonesian women, who are following the trends in fashion and design.”
Bullion for immediate delivery has declined 18 percent to $1,377.50 an ounce this year on concern that the U.S. Federal Reserve will taper stimulus as the world’s largest economy strengthens. The precious metal, which dropped to a 34-month low in June, has lost 28 percent since reaching a record $1,921.15 in September 2011.