The erratic nature of the price of gold is likely to inhibit sales this year, the World Gold Council (WGC) has said.

Gold jewellery is expected to feel the pinch from the oscillating price, with the gold promotional group saying it is not simply a case of the price increasing.

"Price volatility, rather than increase in price, in the last quarter of 2005 was the prime deterrent to purchase," the group said.

The WGC argues that the movement of the price will also make 2006 a difficult year, although it remains confident of long-term demand.

"Economic, demographic and attitudinal changes have together resulted in a significant increase in the size of key markets for gold. Attitudes to gold jewellery and buying intentions remain positive," the WGC argued.

Annual sales of the precious metal surpassed $50 billion last year, as demand and price rises combined to yield large revenues.

Towards the end of last year, however, the volatile price of gold heralded a 15 per cent dip in fourth-quarter jewellery sales.

The erratic nature of the gold price could play a role in pushing consumers towards alternative metals such as platinum or palladium.

White gold, which combines either palladium or nickel with gold, is another option to consumers looking for a different type of jewellery.


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