Old-jewellery sales keep gold refiners busy

Dubai: Gold refiners in Dubai are receiving more old jewellery to process as record high prices of the metal are tempting people to sell gold or trade in their possessions for new items, experts said.

"We are getting a lot of old jewellery in the last three months," Haji Mohammad Rafiq, vice-chairman of Al Ghurair Giga gold refinery, told Gulf News. He said the plant, which expanded its processing capacity from 100 to 400 kg per day last month, is operating at full capacity.

The supply of both scrap jewellery and mined gold from outside the UAE has increased, Rafiq added.

Tushar Patni, chairman of Abu Dhabi's Gold and Jewellery Group, estimates dealers are getting 20 per cent more old jewellery than they were handling two months ago.

"This is going to increase because people want to take advantage of the record price of gold. It is coming from neighbouring countries," Patni said.

Gold comes to Dubai from other countries as the city has good refining facilities. People may be disposing of their old jewellery both for cash and new gold, the industry watchers said.

However, the World Gold Council (WGC) does not think the level of scrap selling is anywhere near the levels seen in 2005 and 2006, when prices shot up.

The amount of jewellery being brought to gold dealers in Saudi Arabia, Egypt, Iran and India - the countries where a big rise in scrap sales would be sufficient to bring down global gold prices - is not significant, WGC Middle East managing director Moaz Barakat said. He said the "perception is that gold prices will further rise."

With global peak retail seasons over after Eid, Christmas and the New Year, high bullion prices are driven by investors.

Junaid Anwar Khan, precious metals trader at National Bank of Fujairah, expects a major correction in the price before the end of March. "Gold could hit $950 in the second quarter, but sharp corrections are possible. Violent corrections will happen more frequently in future," he said.

Spot gold traded at $884.30 at 1513 GMT in London on Thursday.