High prices hit gold sales

The volume of Abu Dhabi's gold sales fell 20% in September, and 10% in the third quarter versus the same periods a year earlier, due to high gold prices, its Gold and Jewellery Group chief said on Tuesday.

"September was a very quiet period for gold sales in terms of both volume and value due to the very high gold prices and October did not start on a positive note either," Tushar Patni told Reuters.

"The market performance in September has weighed down on the third-quarter figures after we hoped for better figures earlier this year," he said in a telephone interview.

Spot gold rallied to $746.30 an ounce, its best level since January 1980 on Monday, mainly as a record-low US dollar against the euro ignited purchases from investors.

Demand from foreign workers and residents in Abu Dhabi buying gifts to take home during the summer holiday boosted volume in the May-July period, he added.

"Some people were buying gold as we approached the end of the month, but that was not because of Ramadan," Patni said.

"In fact if we compared the last 10 days of September to the same period last year, we found out that sales volume dropped down by almost 50%."

The lunar month of Ramadan, which started on September 13, is a month of fasting when devout Muslims refrain from all food, drink or sex during daylight hours. It ends with a feast, during which many couples marry.

Tax-free jewellery in the UAE's gold souks and shopping malls draws Gulf Arab and Western tourists.

Some local traders feared gold sales volume in the UAE could fall by about 10% in 2007, as they did in the previous year due to high prices.

But industry executives have said the regional appetite for gold remains strong despite relatively high prices.

UAE gold sales clocked up 22% in terms of value in the second quarter of 2007 from the year-ago period as demand from tourists increased, the World Gold Council (WGC) said in September.

Second-quarter demand rose 14.6% to 29.8 tonnes from the same period in 2006, while sales value stood at 2.8 billion dirhams ($762.5 million), the WGC said in a statement. - Reuters