Business | Markets
Saudis find gold too hot to handle
Purchases of gold jewellery and investment in Saudi Arabia fell 15.5 per cent to 35.9 tonnes in the second quarter of 2008 on high and volatile bullion prices, the World Gold Council (WGC) said on Sunday.
- Reuters
- Published: 23:21 August 17, 2008
Dubai: Purchases of gold jewellery and investment in Saudi Arabia fell 15.5 per cent to 35.9 tonnes in the second quarter of 2008 on high and volatile bullion prices, the World Gold Council (WGC) said on Sunday.
But in terms of value, gold sales rose 14 per cent to hit 4.84 billion riyals ($1.3 billion) in the second quarter amid the global credit squeeze and inflationary pressures, the industry-funded group said in a statement emailed to Reuters.
"Volatility of world gold prices accompanied with high levels as well as the increase of inflation rates in the kingdom had the impact of decreasing demand in tonnage terms," Bisher Diab, WGC Gulf consultant and Saudi market general manager, said in the statement.
"[But] the region is not experiencing the same economic concerns as other parts of the world, and this positive economic outlook should enable the recent resilience in gold demand relative to other parts of the world to continue. Nevertheless, the level of demand will continue to depend on both the gold price and its volatility."
Gold powered to a record of $1,030.80 an ounce on March 17 on record crude oil prices, fears of inflation and expectations of more rate cuts in the US.
It fell below $800 an ounce for the first time since December on Friday on the back of sluggish European economic data and as the dollar firmed against the euro.
Demand in the UAE followed a similar pattern to Saudi Arabia, falling 10.7 per cent to 26.6 tonnes in the second quarter of 2008.
Dubai is a long-established market for gold bullion and wholesale and retail jewellery, where the trade is fuelled by strong demand from the Arab world and India, the world's top gold market.
Western and Gulf Arab tourists - traditionally vigorous buyers of high quality, glitzy heavy jewellery - visit the UAE's commercial heart to shop for discounted, tax-free luxury goods in huge shopping malls and the gold souq.
Dubai trade
Dubai's second-quarter gold imports fell 2.1 per cent to 143 tonnes, compared with a year ago, and exports plummeted 15.8 per cent to 64 tonnes, figures from the Dubai Multi Commodities Centre (DMCC) showed last week.
Its total gold imports for the first half of 2008 were down 4.7 per cent at 265 tonnes. Total exports during the same period rose 26.1 per cent to 179 tonnes, the DMCC said.
Declines in sales volume of gold jewellery sales and bullion imports earlier this year deepened anxiety among traders that the emirate may lose its lustre as a regional gold hub.
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