JEWELRY DEMAND AND THE PRICE OF GOLD

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.