Business | Markets
UAE third-quarter gold sales soar above previous year's
Investors turn to bullion to protect assets as financial crisis tightens its grip.
- By Natasha Marrian, Staff Reporter
- Published: 00:04 November 24, 2008
- Gold jewellery at Dubai's gold souq. Gold sales in the UAE have soared. Atiq-ur-Rehman/Gulf News
- Image Credit:
Dubai: Gold sales in the UAE soared 56 per cent in the third quarter compared to the same period of 2007, the World Gold Council said on Sunday.
According to the WGC's regional office in Dubai gold sales in the UAE increased from Dh2.8 billion in the third quarter of 2007 to Dh4.3 billion this year.
Gold sales in Saudi Arabia increased by 51 per cent, with sales growing by 42 per cent in other Gulf countries and by 33 per cent in Egypt in the third quarter.
As the grip of the global financial meltdown tightened around large econ-omies in recent months many investors, banks and savers turned to gold to protect their assets. Many jewellery buyers also returned to the market in droves due to a lower gold price.
In the UAE, some jewellery store shelves were emptied at that time of the precious metal as prices dipped.
Tonnage demand for gold was also 18 per cent higher than last year.
Howarth Mak analyst Dr Khalid Maniar said another reason for the regional boom is that GCC countries continued to attract high income earners who can readily afford to splurge on jewellery or precious metals.
The UAE and Saudi Arabia were the main drivers of jewellery demand in the third quarter.
The WGC said demand in the region was also influenced by "key gifting occasions".
"In Dubai, which is the single biggest market in the UAE, the fall in the gold price coincided with the Dubai Summer Surprises. Buyers who pulled back in Q2 due to concerns over the high gold price returned to the market. The Dubai Gold and Jewellery Group announced record sales during the DSS festival.
"The Onam celebrations were also held during the quarter," said WGC Middle East's head of marketing Lama Al Saheb.
"Jewellery demand also benefited from the shortage in bars and coins with consumers choosing to buy jewellery pieces for investment purposes. This shift in demand particularly benefitted low margin and low production cost items such as bangles and chains."
In a recent interview with Gulf News, Rolf Schneebeli, economic adviser for ARY gold firm and former head of the World Gold Council, said demand for gold in the UAE has already and will continue to increase.
"This is on all levels, namely on the investment level for investors holding accounts outside the country as well as within Dubai. Here, we would be looking at increased demand for ETFs (exchange traded funds), coins, as well as ultimately gold stocks, just as Dubai Holding has bought 20 per cent of Citigold, a gold mine in Australia. Also, retail investors will continue to buy gold on dips below the current level," he said.
Gold consumption figures globally indicate an increase of 121 per cent to 232 tons in retail investment demand with strong bar and coin buying reported in the Swiss, German and US markets.
There were widespread reports of gold shortages among bullion dealers across the globe, as investors searched for a haven in the third quarter.
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