Jewellery is the most important end use of newly mined gold. This pape
r analyses the relationships between jewellery demand, the price of go
ld and expenditure and taste variables. The analysis exploits a new ti
me series/cross-section data set on trade purchases of jewellery in si
x developed countries, using a seemingly unrelated regression (SURE) m
odel. We find direct price elasticities in the range -0.5 to -1.0, and
some evidence of speculative purchases ahead of expected price change
s.