Retail gold sales slump in Abu Dhabi

GOLD JEWELLERY: Retail sales slump as economy slows. (Getty Images)

Retail gold sales volume in Abu Dhabi fell 20 percent on the year in the first quarter 2009 as high prices and a slowing economy sapped demand, a member of the Abu Dhabi Gold and Jewellery Group said on Tuesday.

Retailers in the emirate sold around 4,500 kg of the precious metal in the first quarter, said Tushar Patni, managing director of Ajanta Jewellery and a member of the Abu Dhabi Gold and Jewellery Group.

"With people trying to tighten their belts it's not a good time for gold retailers," Patni said. "In volume terms, the Q1 figures this year are around 20 percent lower than the first quarter of 2008."

Last week, Patni said small retailers in Abu Dhabi were struggling to survive as the combination of high prices and the economic downturn keeps tourists and consumers away.

Gold bullion prices have risen as investors switched money into gold, looking to defend value as other asset classes performed poorly during the slowdown.

Tax-free jewellery in the UAE's gold souks and shopping malls is a major draw for many Gulf Arabs, Asian and Western visitors, but the recession has hit that source of income.

Sales to tourists account for about 60 percent of retail gold sales in the UAE.

In terms of value, Abu Dhabi first quarter sales fell about 7 percent on the year to 450 million dirhams ($122.5 million).

The rise in price has compensated for some of the fall in sales. An ounce of 22 carat gold was selling at 99 dirhams, down from around 82 dirhams a year ago, he said.

Sales should pick up in the second quarter if the price falls, Patni said.

"I think retail gold has reached its peak at this point and we should be seeing it slide down again soon," said Patni.

The government of Abu Dhabi has plans to boost spending on marketing for gold retailers and will make changes to the format of the informal jewellery group to do this. The group currently represents some 110 retailers. (Reuters)

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