Turkish gold jewellery demand seen falling 20 pct

By Emma Ross-Thomas

ISTANBUL, March 27 (Reuters) - Demand for gold jewellery in Turkey, the world's third largest gold consumer, is expected to fall about 20 percent this year, hit by high prices, a global slowdown and a fashion for diamonds instead of plain gold, jewellers say.

And amid soaring prices, one of Turkey's leading jewellers, Altinbas, is thinking about expanding into silver jewellery, following a move by rival Goldas GOLDS.IS into high-end silver pieces.

"It's cheaper, it's fashionable ... you can make affordable jewellery collections," Ali Bulut, chief executive of Altinbas's Jewellery Group, told Reuters. "The high price of gold is a very dominant factor in all these things."

Turkey is one of the top three gold jewellery exporters in the world. At home, Turks have traditionally held gold as a safeguard against soaring inflation and tend to load brides up with the metal at weddings.

The Turkish Association of Jewellers' general manager, Metin Duyar, told Reuters he expected domestic jewellery demand to fall at least 20 percent this year, in terms of weight.

"As a result, gold imports should fall," he said on the sidelines of a jewellery conference in Istanbul, adding he expected demand to remain weak for another year or two.

"Along with reduced demand and a decline in purchasing power, people are trading in their gold for money," he said, adding that around 5 tonnes of scrap had come back onto the market in the first three months of this year.

That represented a slowdown from the fourth quarter, however, according to Goker Yildirim, deputy head of domestic sales at Favori, a wholesaler and retailer.