Italian gold jewellery output and exports would fall around 10 percent in 2006, hit by metal price volatility and competition from lower cost countries, but the sector should see recovery in 2007, an expert said on Monday.
Italy's gold jewellery industry used to dominate world markets but has been overtaken as India boosted its own sector. Italy is struggling to stay ahead of Turkey and China where labour is cheaper and quality is rapidly improving. Continuous price volatility has put off clients and triggered falls in jewellery output and exports, said director of Italy's goldsmiths' body Federorafi Stefano de Pascale, who has narrowed his previous forecasts towards their lower end.
"I confirm those forecasts (of export fall of 5-10 percent), which I consider realistic, but maybe more towards 10 percent than 5 percent, unfortunately," de Pascale told Reuters in a telephone interview.
"For production, we can see a decline of about 10 percent in volumes," he said. Italian gold jewellery output, including use of scrap, fell 10 percent to 275 tonnes, in 2005, its lowest level since 1988, according to data from UK-based GFMS precious metals consultancy, released earlier this year.
Gold prices soared to a 26-peak in May but have fallen back sharply to trade in feverish volatility. "The situation is very uncertain, especially because of the metal price fluctuations in the first six months of this year," ... de Pascale said. "With the prices so volatile, the situation for producers remains uncertain... We are in a stand-by mode".
According to his approximate forecast, gold use by Italian jewellers was likely to fall 8-12 percent. Italian gold jewellery - suffering a structural crisis since 2002 - may bottom out next year, powered by manufacturers who have reorganised business, cut the distribution chain and launched aggressive advertising campaigns, de Pascale said.
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