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Sun 4 Jan 2009 12:28 PM

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Abu Dhabi gold jewellery sales fall 40% in Dec

Higher prices, uncertain global financial outlook crimps buying - industry chief.

The volume of gold jewellery sales in Abu Dhabi fell about 40 percent in December from November as higher prices and the uncertain global financial outlook crimped buying, the emirate's industry group said on Sunday.

Sales in January could pick up if prices retreat enough to make the precious metal more attractive to buyers looking for an alternative to investing in equities, said Tushar Patni, the chairman of Abu Dhabi Gold and Jewellery Group.

Prices in December averaged about 99 dirhams ($26.95) a gram, up around 11 percent from November, Patni said.

"If prices fall below 90 dirhams, then we could see buying activity pick-up, but at the moment prices are still too high," he said.

"Gold is a luxury item. People are less inclined to spend on such items when the economy is not doing well."

Re-selling of gold jewellery is beginning to rise, Patni said.

"People view current prices as an appropriate time to cash in," he added.

Spot gold ended December at around $878 an ounce on Friday, up over $60 from the end of November.

Prices for the bullion remain well supported compared to other commodities as investors continue to seek the metal as a haven from risk as global financial turmoil hammers other asset classes. (Reuters)

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