Liam Denning is a Bloomberg Gadfly columnist covering energy, mining and commodities. He previously was the editor of the Wall Street Journal's "Heard on the Street" column. Before that, he wrote for the Financial Times' Lex column. He has also worked as an investment banker and consultant.

If it's late August, then you've probably got your eyes trained on Jackson Hole. And why not, with those magnificent mountain vistas?

And let's not forget those central bank officials gadding about the place.

Gold holders, especially, will be focused on Federal Reserve Chair Janet Yellen's speech on Friday at the annual economic symposium and, in particular, any Delphic hints of what's next for interest rates. This makes sense, but there's an equally important story playing out in gold across the globe.

The Shining
Gold has risen back above $1,300 an ounce this year
Source: Bloomberg

Gold investors like the metal for any number of reasons, but they usually boil down to its scarcity and safe-haven properties. Everyone else likes it because, you know, it looks nice and feels pleasingly weighty. That broad, transcendent appeal is one of the gold market's biggest strengths.

Lately, though, it's been all about the investors, as the pleasingly-weighty crowd have held back.

Take A Ring Off It
Investment demand for gold has overtaken a shrinking jewelry market this year
Source: World Gold Council

That sudden expansion in the red bit of the bars above is why gold reversed its decline so sharply this year. A stew of renewed economic fears and the descent of bond yields into Minus Land have reinvigorated investor demand -- particularly for gold-backed exchange traded funds.

Exchanging Places
The structure of the gold market has changed fundamentally since the financial crisis and ETFs have become a critical pillar of support
Source: World Gold Council
Note: Data show proportions of overall gold demand.

Gold prices hit their all-time peak in 2011, which also happens to be the last time jewelry demand was languishing at less than 50 percent of the market. Jewelry demand rebounded after that, as ETF demand went into reverse and made bling more affordable -- by 2014, jewelry demand in absolute terms had gotten back to pre-crisis levels. But the gold-price rally this year, as investors have piled back in, appears to have put off the bauble buyers again.

Three of the biggest markets for gold jewelry are China, India and the Middle East, accounting for 71 percent of demand last year. They've definitely lost their appetite recently.

Buried Treasure
Gold jewelry demand in the big three markets fell by 18 percent, year over year, in the second quarter
Source: World Gold Council
Note: China data include Hong Kong.

Demand really fell off a cliff in the Middle East and India. The former's woes all stem from the extended collapse in oil prices. India's, meanwhile, have been exacerbated by its weaker currency.

Location, Location, Location
Anyone buying gold in rupees is now back to paying prices close to their all-time peak
Source: Bloomberg
Note: Gold priced in different currencies, with performance indexed to 100.

What's interesting is that it isn't just jewelry demand that's down in these regions; demand for gold coins and bars as investments has also fallen, by 12 percent in the second quarter versus a year ago, according to data from the World Gold Council.

It looks like $1,300 an ounce could be a threshold beyond which many jewelry buyers just refuse to step these days. That makes the current rally dependent on continuing flows into gold-linked financial products. Apart from physical gold ETFs, speculative longs in futures and options have spiked.

Shiny Happy People
Non-commercial net length in Comex gold futures and options is now higher than at the market's peak
Source: Bloomberg

Looking at that chart, and with the world's biggest jewelry fans taking a break, you have to ask yourself where the marginal buyer is going to come from. The right formula of words from Yellen's lips on Friday could coax them out. Equally, though, the Fed chair's musings might send those chasing the recent momentum into reverse. If your eyes are trained on Jackson Hole, focus less on the peaks, more on the valley.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Liam Denning in New York at

To contact the editor responsible for this story:
Mark Gongloff at