Turkey’s January gold imports down on higher price, weak lira

Turkey’s January gold imports down on higher price, weak lira

ISTANBUL - Reuters
Turkey’s January gold imports down on higher price, weak lira

Turkey’s ongoing gold import rise has been interrupted by weakening lira and global price developments. AA photo

A sharp fall in the Turkish lira and rising world gold prices curbed Turkey’s demand for gold in January, slashing monthly bullion imports by more than 80 percent, data from the Istanbul Gold Exchange showed.

Turkey imported only 6 tons of gold bullion in January, a 47 percent drop compared with the same month last year and an 81 percent plunge from December’s 31.65 tons, according to the data from the exchange, part of Bourse Istanbul.

“Lira depreciation has made gold more expensive. The Fed’s steps have caused world gold prices to rise. These have all negatively affected the gold demand,” said Mehmet Ali Yildirimturk, the head of Istanbul’s Chamber of Jewelers.

Investors sold off emerging market assets in expectation that the U.S. Federal Reserve will continue gradually to reduce its stimulus program.

The lira was among the biggest losers, particularly vulnerable because of Turkey’s large current account deficit and political uncertainty surrounding a corruption scandal.

The lira has dropped around 5 percent since the start of the year, while world gold prices have gained around 4 percent, following a 28 percent drop in 2013.

Concerns about the fragility of stock markets after a heavy selloff in recent months have also piqued investor interest in gold.

Yıldırımtürk expected Turkey’s demand to remain subdued in the first quarter, particularly after a sharp interest rate increase by the Central Bank last month to shore up the currency. Turkey’s gold trade with Iran boomed in 2012 when Ankara was paying for its natural gas and oil imports with Turkish lira, and Iranians were using those deposits, held in Turkey’s Halkbank, to buy gold.