GOLD

NEW YORK (AP) - Demand for gold jewelry dropped sharply in 2006 in a roller coaster market that saw record price spikes, but investor appetite for gold remained robust, according to a report by the World Gold Council released Thursday.Gold jewelry demand slackened 16 percent worldwide to about 2,499 tons last year. Despite lower volume, the dollar value of all gold purchased in 2006 climbed 14 percent to $44 billion, as buyers of gold jewelry paid considerably more due to peak market prices.The price of gold settled at a 25-year high near $720 in May.George Milling-Stanley, a spokesman for the World Gold Council, called last year's market volatility "exceptional in historical terms." The price of gold has climbed $100 a year for five years, he said. But in 2006, the move from $600 to $725 took just 18 consecutive trading days."It's the volatility in the price that cuts demand off," he said.Investors weren't so easily swayed by gold's pendular price swings.Investment demand rose 7 percent last year to roughly 702 tons, according to the report, and jumped 45 percent in dollar terms to $12.36 billion. The flow of money into exchange-traded funds -- those that track a commodity or a basket of commodities -- surged 73 percent in dollar terms.All told, gold demand totaled $65.26 billion in 2006, up 22 percent from the prior year.This year, the World Gold Council said it has seen jewelry demand rebound in January, while investor interest remained positive. Milling-Stanley said even if gold continues to trade near $650 an ounce, jewelry demand could continue to rise -- as long as the market moves calmly higher."What we've seen in the last four months has been incremental rises in the price," he said. "That gives jewelry consumers time to adjust to a higher price."But if the market returns to last year's level of volatility, he said, jewelry demand could again be choked by the uncertainty.