RI's demand for gold drops by 42 percent

RI's demand for gold drops by 42 percent

JAKARTA (JP): Indonesia's demand for gold during the second
quarter of this year dropped by 42 percent to 22 metric tons
compared to the same period last year, according to the World
Gold Council (WGC).

Leo Hadi Loe, WGC country manager for Indonesia, said the
biggest drop during the second quarter occurred in May and June
as political tension rose ahead of the People's Consultative
Assembly, which ended on Friday.

Quoting from WGC's August gold demand report, Leo said
political uncertainty prior to the Annual Session had caused a
plunge in the rupiah's value and raised local gold prices.

"This caused consumers to delay gold purchases and even
prompted them to sell their gold," Leo said in a news statement
made available to The Jakarta Post on Saturday.

He said demand for gold jewelry in the second quarter was even
worse than the demand for gold for investment needs.

Demand for gold jewelry, he said, declined by 47 percent from
the same period last year, compared to the demand for gold as an
investment, which dropped by only 17 percent.

Leo said total gold demand for the first semester of this year
reached 49.6 tons of gold, which was 19 percent lower than during
the same period in 1999.

"As of April this year, demand for gold was still relatively
strong," he said.

He attributed the previous strong gold demand to a good crop
harvest and the reintroduction of gold as a saving alternative
for the Haj pilgrimage.

Leo further said the world's total demand for jewelry in the
second quarter of this year reached 695.3 tons, dropping slightly
by one percent from the same period in 1999.

Whereas jewelry demand during the first six months of this
year reached 1396.4 tons, or a drop of four percent compared to
the same period last year.

In contrast to Indonesia, several countries reported a sharp
increase in jewelry demand during the first half of this year,
according to WGC's report.

Jewelry demand in Turkey rose by 49 percent, in Mexico by 17
percent, in Malaysia by 22 percent, in Taiwan by 69 percent while
the United Kingdom reported a growth of 12 percent, the council
said.

WGC reported that gold demand in 27 countries remained strong,
dropping only two percent to 789 tons during the second quarter
of this year.

The council said the demand for the first semester of this
year reached a total of 1584.2 tons, dropping by only 0.6 percent
from the same period last year.

WGC chief executive Haruko Fukuda described the continued
strong demand for gold as hope in light of the persistent weak
demand for gold as an investment.

The council said the demand for gold as an investment in the
second quarter of this year dropped by 22 percent, or down to
93.7 tons from the same period in 1999. (bkm)