Americans’ appetite for Christmas bling on fire as gold prices sink

2013-12-24 10:09

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

The US gold jewellery 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 JC Penney Co Inc’s 20% discount on fine jewellery, and paid $40 (R414) for a 10-karat gold necklace.

Gold prices have plunged almost a third this year, halting a 12-year run of gains. Gold lost favour with institutional and retail investors as they braced for the US Federal Reserve to reduce its monthly $85 billion bond-buying programme, 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.

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, said last week.

“People are saying ‘Wow, gold is down. I can finally get the ring or piece of jewellery I want,’” he said.

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

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