UAE gold sales shine despite rising prices

Dubai: Retail gold sales in the UAE increased 24 per cent in value terms last year as jewellery consumption increased by eight per cent over 2006 despite the 15 per cent increase in gold prices, the World Gold Council's regional office in Dubai said on Saturday.

Overall, gold consumption in the Gulf region increased 19 per cent as Saudi Arabia and Egypt reported sales growth of 33 per cent and 29 per cent respectively.

High and volatile gold prices had a major impact on the fourth quarter of 2007. Gold jewellery consumption dropped by nine per cent in the UAE, 10 per cent in Saudi Arabia, and 11 per cent in other Gulf countries.

Gold demand in Saudi Arabia was 120.2 tonnes in 2007, up from 104.3 tonnes in 2006, while sales value surged 33.3 per cent to $3.2 billion. While demand fell 8.9 per cent to 22.4 tonnes in the fourth quarter from the same period a year earlier due to price volatility, it rose 4.9 per cent in value to $599 million.

Shortfall

The impact of the gold price increase has been felt worldwide and it had an impact on gold sales in tonnage terms from the previous year, the World Gold Council said.

The trend was strongly felt in India, the world's largest and also the most price-sensitive market, where demand fell 64 per cent on year earlier levels following 40 per cent growth in the first three quarters.

The US was also negatively impacted with a combination of a weak economy, poor retail environment and record prices denting jewellery demand, which stood 14 per cent down on 2006 figures.

Middle East demand was not as drastically affected as the other regions. For the year as a whole demand increased in the Middle East.

Egypt specifically was an exception in the fourth quarter with demand rising on the back of economic recovery resulting in 12 per cent growth for the year as a whole.

"Comparing the Middle East performance to the rest of the region, we are delighted to see that the high and volatile gold prices did not affect the gold market to the extreme as the other regions. Despite the shortfall in tonnage in the recent months, the annual figure reflects a positive outlook," said Moaz Barakat, managing director of the World Gold Council.

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