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London, UK—Gold jewelry consumption and fabrication both registered a global drop in the fourth quarter of 2018, says the latest GFMS Gold Survey, published by Refinitiv consultancy. North American demand rose sharply but it wasn’t enough to offset declines in the rest of the world. (Left: 14k gold and diamond ring by I. Reiss).

Global gold jewelry consumption fell 3% and global fabrication fell 2%. Weakness across Europe following turbulent internal politics and cooling trade resulted in consumption across the region falling by 14%, while fabrication dropped off by 7%, largely driven by weakness in the United Kingdom which recorded its lowest level of production this century. While North American fabrication and consumption jumped by an impressive 17% and 41% resulting from a rising dollar and improving economy, weakness in both European and Asian demand offset any North American gains. The Asian market totals more than 80% of total global jewelry fabrication and consumption; fabrication declined 2% and consumption declined 5% in Q4 2018, following a slowdown in economic performance.

The retail gold sector (coin and bar demand) also declined in the quarter, falling 3% globally. A strong dollar and economy drove North American demand down 28% year on year, while demand also softened in South America, Asia, and India and Chinese demand remained depressed. Only Europe and Africa showed any pickup in this sector, with African demand, mainly coins, jumping 48% and European demand boosted to its highest level since 2016 by concerns over internal politics, weakening trade, and increasing protectionism policies.

Investment gold also is benefiting from increasing uncertainty, as investors are seeking safe havens. Activity in the professional investment sector gained traction in Q4 2018.

Global mine production increased by 27.7 tonnes, or by 1.2% year-on-year in the first nine months of 2018.

GFMS expects gold prices to continue to benefit from ongoing economic uncertainty and a slowdown in the U.S economy. “As we approach the end of the economic growth cycle, demand for defensive assets is likely to pick up as concerns deepen about the widening U.S. budget deficit and as the tariff-driven trade war starts to damage the country’s economy. Gold rallies are more likely to be sustained if investor demand is resilient and broad-based. The scope for rising inflation, the interest rate-hiking trajectory nearing the end of its cycle and a stock-market correction could reignite interest in gold and drive the dollar lower.”

The organization forecasts gold to average $1,292/oz in 2019. The price at press time was $1,340/oz.