Haj pilgrims increase retail demand for gold in Saudi Arabia

Makkah: The annual Muslim pilgrimage to Makkah is increasing the demand for gold jewellery in Saudi Arabia, but business is still sluggish due to high prices, gold retailers said yesterday.

"Haj is the main season. After that, the business will be weak," said Ali Al Asadi, a gold salesman in Makkah. He said customers bought on average 80 or 100 grams, compared with 200 previously, before gold prices went up.

Spot gold was bid at $1,365.95 (Dh5,016) an ounce yesterday against $1,366.35 late in New York on Friday.

That compares with levels of around $1,100 in November a year ago. Several traders said demand for gold was up around 10 per cent during Haj, but that high prices would deter purchases in the rest of the year.

"Despite the increase in the price of gold every year, we thought that sales would decrease, but there are increases in sales with the increase of pilgrims, and there are good purchases," said Abdullah Al Maliki, a gold retailer opposite the Grand Mosque.

Hoteliers expect up to three million pilgrims this Haj, more than last year's numbers when many stayed at home due to swine flu worries.