In this context, jewellery is a mark of prosperity, and the rapid expansion of demand for jewellery in newly prosperous areas like Asia is likely to continue in the medium term while those areas continue to thrive. For example, a slow down in Chinese gold demand in late 1993 occurred as a result of the Chinese austerity program. The higher gold price over the last 18 months has led to a fall in gold demand for jewellery, especially in the price-sensitive Asian gold markets. However, gold demand for jewellery is likely to rise as economic growth gathers momentum in Europe, and as the Asian market adjusts to the new price. Meanwhile, industrial demand received a boost in 1994 from the strength of the computer market.
Primary production is unlikely to increase sufficiently to meet increased demand.
In the long term the gold price will rise or fall depending on whether private and public stocks can and will be mobilised to supplement production. Present indications are that mobilisation will be slow, and the gold price may therefore rise over the next few years. For example, supply to the market actually fell in 1994 due mainly to reduction in sales from the world's central banks. Also, if inflation in the world economy increases then there may be an increase in speculative investment in gold which could also force up prices.