UAE gold sales break through $1bn barrier

GOLDEN TOUCH: Total sales are up across the Gulf despite the fact that demand decreased. (Getty Images)

UAE gold sales has increased by 20 percent to more than $1 billion in the second quarter of 2007, according to The World Gold Council's regional office in Dubai.

Figures released on Sunday also revealed that gold sales increased by 14 percent in Saudi Arabia and by two percent in other Gulf countries. Additionally, Egypt witnessed an astounding sales increase of 48 percent.

The high and volatile gold price continued to dampen demand in tonnage terms during the second quarter, particularly for jewellery. While the average gold price, at $896.29/oz, was well below the peak of $1,011/oz seen in mid March, it nevertheless represented a 34 percent rise on the average price of the same period in 2007.

Total identifiable demand fell 11 percent in UAE, 15 percent in Saudi Arabia and 24 percent in other Gulf countries but there was a notable exception in Egypt, where gold demand increased 10 percent. The rise in the gold price provoked a surge of both jewellery and investment buying in Egypt due to the widespread belief that the price was going to rise further.

The report added that in Dubai, the centre of jewellery demand in the UAE, an increase in tourist numbers had a positive influence on jewellery demand, especially towards the end of the quarter when the Dubai Summer Surprises campaign started.

The second quarter also saw the traditional pre-vacation purchasing of jewellery as gifts and an increase in advertising activity within the jewellery sector in both the UAE and Saudi Arabia. Historical trends suggest a strong correlation between jewellery campaigns and spending patterns in those markets, and this quarter was no different.

James Burton, CEO of World Gold Council said: "As expected, the continued high and volatile gold price, together with economies across the globe witnessing inflationary pressures and a tightening of consumer wallets, dampened consumer demand for gold in tonnage terms during the quarter. Despite this, consumers are continuing to spend more money on gold, even if they no longer get as much of it.

"This reinforces the positive attitude and buying intentions of consumers, and indicates that despite price increases, gold demand remains robust."

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