Abu Dhabi gold sales remain 'largely flat'

GOLD SALES: Retailers in Abu Dhabi reported flat sales during May. (Getty Images)

Gold jewellery sales remained largely flat in May as stable prices attracted expatriates leaving on summer holidays, the chairman of the Abu Dhabi Gold & Jewellery Group said on Monday.

Earlier this year, many smaller retailers in Abu Dhabi, the capital of the UAE, were under threat of shutting down as the economic crisis and high prices cut consumers' appetite for the precious metal.

In April however, gold sales rose 25 to 30 percent due to lower prices and the start of the Indian wedding season which brought back buyers to the market.

"In May it was standard. There was no increase or decrease in sales and this was largely due to stable prices in the first three weeks," Tushar Patni said.

"In the last week of May prices went up, so sales were not good but overall last month was okay because many shopped as they leave on vacation," he said.

Prices of 22 carat gold hovered around 101 to 102 dirhams per gram in the first three weeks but jumped to a peak of 111 dirhams in the last week, he said.

Spot gold traded from a low of $884 to a high of $975 an ounce in May compared to $905 to $908 average in April and $930 in January this year.

Retail gold prices move in line with the spot prices. Spot gold prices have eased this year as investors switched from gold to equities due to the recovery in stock markets.

But the crisis is far from over as Patni said traders are bracing for a slow period in the summer months of June to August when sales are slowest as expatriates leave on vacation.

Indians are the largest expatriate group in the UAE.

"We expect sales to be slow in June, July and August and if prices continue to go up, traders will have a tough time," Patni said.

Traditionally tax-free jewellery in the UAE's gold souks were a major attraction for tourists, but as the visitor numbers dropped this year so have sales.

In Dubai jewellery sales dropped by around 40 percent in May, hit by fewer tourists and tighter budgets, retailers told Reuters last month.

In the Middle East, demand for gold fell 26 percent year-on-year during the first quarter, bucking a global trend that saw demand increase as investors bought gold as a safe haven from the economic maelstrom, the World Gold Council (WGC) said in its quarterly report last month.

Both jewellery and investment recorded similar percentage declines, with a fall of 26 percent to 49.5 tonnes and 28 percent to 4.1 tonnes respectively, it said. (Reuters)

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