Lower prices jolt gold sales

DISCOUNT SHOPPING: Lower prices lure buyers back to the gold markets. (Getty Images)

Abu Dhabi's gold jewellery sales rose 10% in volume and 25% in value in March as the easing of prices from record highs spurred buying, the Gulf Arab emirate Gold and Jewellery Group chief said on Saturday.

"Once prices started to drop, people were just flocking to shops and buy gold, because they thought prices will go higher again, and will break new records," the industry group's Tushar Patni told newswire Reuters.

Compared to Dubai, we were lucky, because it looks like we just had the right buyers, more wealthy gold buyers, in the right time," he said in an interview.

Dubai's gold jewellery sales volume rose 12% last month and 5% in the first quarter of the year as buyers adjusted to high prices, but traders said the recovery is likely to be short-lived if prices remain volatile.

Spot metal fell as low as $877.60 an ounce in Europe on Friday as a sharp drop in a gold-backed exchange-traded fund put a damper on bullion's initial rally on the back of surging crude oil.

The yellow metal was expected to face further downward pressure after falling nearly 15% from last month's record high. Near-term sentiment had also turned bearish since gold broke its 100-day moving average of just above $900 an ounce last week, dealers said.

Sales of Abu Dhabi's gold jewellery were steady in volume in the first quarter of 2008 compared to the same period a year earlier, but their value rose by 30% on record high gold prices, Patni said.

"What will happen this quarter will mainly depend on the direction of gold prices and whether expatriates will be buying gold to take back home in the summer holiday if prices go higher," he added.

Tax-free jewellery in the UAE lures many Gulf Arab and Western tourists.

Abu Dhabi has 85 gold shops and its own jewellery manufacturers. Imports, however, make up almost 60% of all jewellery sold at retail outlets.

The UAE's full-year 2007 gold demand rose 8% to 99.8 tonnes, but it fell 8.1% to 19.3 tonnes in the fourth quarter, the World Gold Council (WGC) has said.

Value of gold sales in the seven-member federation that includes Dubai rose 23.8% to $2.6 billion in 2007. Fourth-quarter sales value reached $516 million, an almost 6% increase from the same period a year earlier, it added. (Reuters)

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM