Dubai retail gold sales drop 40% in Sept - trade

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Retail gold sales in Dubai fell around 40 percent in September compared to the same period last year, as activity in the yellow metal continued this year's slump due to high prices, retailers said on Sunday.

Gold prices have been on the rise as global institutional funds seek a safe haven for their assets during the economic slowdown.

"Sales during September dropped around 40 percent from last year as the high price of gold is not affordable to many consumers," said Musuhaq Ahmed, sales manager at Nadia Jewellers, based in Dubai's old souk.

Gold has touched the four-digit mark, reaching $1000.95 an ounce on Sunday compared to a one-year low of $680.80.

"Retail gold sales will only improve if the price of gold returns to the $800 mark, but I don't think that will happen soon as investor demand is still on the rise," said Razeen Mohamed, assistant manager at Mansuk Jewellers at Dubai's old gold souk.

However, with the traditional Arab and Indian wedding season approaching some retailers hope to see sales improve during the coming months.

"There is no escape from buying gold during a wedding season, it's a tradition that can't be broken even by the recession," said a salesman at Paul & Sons Jewellers' in the old gold souk. "Over the October and November period I think things will start to pick up a bit."

Another trend that retailers are hoping for is consumers buying gold as an investment.

"Right now only the wealthy consumers are the ones who are buying jewellery as an investment as they suspect the price of gold will rise even more," said Vincent George, store manger of Chittilappilly Jewellers at the old gold souk.

"But maybe when more people start getting secure about their jobs they would buy more gold as an investment even if the prices are still high," he added.

Gold jewellery sales in Dubai have been declining since the start of the year, with a drop in the numbers of tourists visiting the emirate also contributing to the fall as they make up a large part of the customer base.

"It will take us about one to two years to fully recover from the downturn of this year's slow sales," said Shibu Mohamed, sales executive at Modern Jewellery in the old gold souk.

Total demand for gold in the Middle East region fell by 18 percent in the second quarter of this year to 72 tonnes, after being up 33 percent in the previous quarter, according to a report released by the World Gold Council (WGC) in August.

The investment component of demand fell 31 percent to 3.8 tonnes, while the jewellery off-take was 17 percent below second-quarter 2008 levels at 68 tonnes, it added. (Reuters)

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