Business | Markets
Dubai gold imports likely to remain strong
Strong gold prices are unlikely to put the brakes on Dubai's imports of the precious metal despite a recent fall in purchases by the "City of Gold", industry executives say.
- Reuters
- Published: 23:36 June 9, 2008
Dubai: Strong gold prices are unlikely to put the brakes on Dubai's imports of the precious metal despite a recent fall in purchases by the "City of Gold", industry executives say.
Gold's surge to multi-year highs earlier this year scared buyers in many parts of the world and pulled down Dubai's first-quarter imports by 7.6 per cent to 122 tonnes.
Last year, gold imports reached 559 tonnes on investor appetite for the metal, while exports hit 287 tonnes.
Dubai has the highest concentration of jewellery shops in the world, generating trade worth $35 billion last year - 20 per cent of the $173 billion total global jewellery trade.
"Dubai will finish this year with the same level of gold imports we have seen last year regardless of the high volatile prices," said Moaz Barakat, managing director of the World Gold Council in the Middle East, Turkey and Pakistan.
"Imports are not directly related to price only. You have other factors like exports and industry demand," he said.
Spot gold powered to a record of $1,030.80 an ounce on March 17 on record-high crude oil, fears of inflation and expectations of more rate cuts in the United States, making the metal more attractive as an alternative investment.
Bullish sentiment
Gold has since fallen, but rose to a high of $900.30 an ounce on Friday on record oil prices and a dollar drop after data showed a sharp rise in US unemployment and as equity markets slipped on worries about economic growth.
"On the jewellery side, buyers tend to adjust to prices quicker in this region, and on the investment side, when there is a bullish sentiment, you get investors pouring money into gold," said Tawhid Abdullah, manager director of the Dubai Gold and Jewellery Group.
"We are also seeing higher export demand from other regional markets, so I think we will comfortably see higher import figures this year," he said.
Dubai's gold and jewellery trade is fuelled by demand from the Arab world and India, the world's number one gold market.
Gold trade through Dubai reached $7 billion in the first quarter, up 71.5 per cent from the same period a year earlier, while exports surged 74.2 per cent to 115 tonnes, the Dubai Multi Commodities Centre (DMCC) said in May.
Tax-free jewellery in the gold souqs and shopping malls in the UAE draws Gulf Arab and Western tourists.
Drops in sales volume of gold jewellery and bullion imports earlier this year have deepened anxieties among traders that the emirate may lose its lustre as a regional gold hub.
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