Financial Tribune- Iran�s jewelry market registered strong growth in the second half of 2017, with demand rising 20.5% at an annualized rate to hit 22.9 tons, according to a report by World Gold Council released on Thursday.

The figure marks the highest first-half growth for the country in four years.

Bumper gold sales in the Middle East�s second largest economy come, as regional jewelry demand was flat during the six-month period, disguising some sharp country-level divergences.

Demand in Egypt, for example, dropped 20% year-on-year, hitting a new low of 4.7 tons as the Egyptian pound remains very weak, keeping local gold prices elevated.

The robust jewelry demand is buoyed by sustained improvement in consumer confidence in Iran�s gold market, as President Hassan Rouhani is expected to be sworn-into office for his second term in a high-profile ceremony on Saturday.

According to WGC figures, Iran�s Q2 demand rose by 15% to 10.2 tons on the back of positive consumer sentiment buoyed by Rouhani�s landslide victory in the presidential elections in May and expectations that interest rates may drop later in the year.

H1 demand was 20% higher at 22.9 tons�the highest such total for four years.

Demand in Iran also rode on the wave of optimism sparked by a number of high-profile foreign investment deals recently signed by the country.

Consumer demand has hovered between 36.6-127.7 tons during 2010-16, peaking in 2013 at 127.7 tons.

In line with data issued by WGC, which acts as the market development organization for the gold industry, Iran�s gold bar and coin demand reached 6.2 tons compared with 2 tons in the first half of the previous year.

The Central Bank of Iran has minted Bahar Azadi gold coins since the 1979 Islamic Revolution, replacing the old-order coins issued before the revolution.

Turkey & Rest of Middle East

Demand across the Middle East was, unsurprisingly, poor given the environment of relatively low oil prices and continued geopolitical unrest.

Based on WGC�s report, while Egyptian market is at an all-time low following a 19.2% YOY decline in jewelry market in the first half of the year, Turkish jewelry demand rose to 11.1 tons, registering a 33.7% growth compared with H1 of the previous year.

The industry-funded WGC enumerated three reasons behind the Turkish market increase: economic recovery, double-digit inflation of around 10.9% and relative currency stability.

Global Trend

Global demand for gold declined 15.7 % YOY to reach 2003.8 tons in the H1 due predominantly to a dramatic drop in purchases by Exchange Traded Funds, which went down by 50% to reach 56 tons.

Last but not the least, technology�s share of gold purchases marked a 2.23% growth with electronics grabbing the lion�s share. The sector is using gold for printed circuit boards, bonding wires and LEDs.

As the world is anticipating higher memory and quicker devices, more gold would be used to fabricate the new chips for that purpose.