By Amena Bakr
UPDATE 1: Dubai's gold jewellery sales down 30% Y-o-Y; Abu Dhabi retail sales hit 2009 low.
Gold jewellery sales in Dubai fell around 30 percent in August, compared with a year earlier, as high gold prices and an economic downturn deterred buyers, retailers said on Thursday.Dubai's gold retailers are seeing sale volumes drop as prices of the metal are boosted by institutional funds seeking a safe haven for their assets during the global economic slowdown.
"Our sales in August have dropped by around 30 percent from last year because the price of gold is too high for (retail) consumers during this crisis," said Sanjay Brahatti, co-owner of Al Khaledyah Jewellery, which is based in Dubai's old gold souk and has five branches.
"And if things continue like this over the coming two months, we are thinking about cutting down the number of branches to ease costs," he said.
Gold has risen by more than a quarter to about $980 an ounce on Thursday from a low of $773.90 in August last year. In October it dipped to a one-year low of $680.80.
A decline in the numbers of tourists visiting the emirate had also contributed to the fall in sales, as they make up a large part of demand.
"There are far less tourists this year compared to last year and this, with the high gold prices, has really hit business bad," said Hassan Salah, account manager at Kaloti Jewellery, a retail gold wholesaler in Dubai.
Improved demand is expected during November and December, said a sales manager at Sparkling Ambience Jewellery at the Dubai Mall.
"Things are really bad now, but hopefully with the Christmas holiday season coming up, people will start buying jewellery as gifts," he said.
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 jewellery off-take was 17 percent below second-quarter 2008 levels at 68 tonnes, it added.
In the Gulf region, retail gold sales fell 17 percent during the second quarter of this year, compared with the same period in 2008, said Rozanna Wozniak, investment research manger at the WGC.
In the United Arab Emirates, retail gold volume was down 18 percent in the second quarter compared with the same period last year, she added. "And I believe we can only see a recovery in these traditional markets if the price drops, only then people will start repurchasing gold they have sold."
Meanwhile, hgher prices and low buyer turnout in August saw retail gold sales plummeting by 40 percent in Abu Dhabi, the worst sales this year, retailers said on Thursday.
Prices of the yellow metal have been boosted by institutional funds seeking a safe haven for their assets during the global economic crisis.
The average price of 22 carat gold in August was 107 dirhams ($29.15) a gram compared with 82 dirhams ($22.34) in August last year and 105 dirhams ($28.61) in July this year.
"The market was very bad last month, almost 40 percent down. It is always like this because it is holiday month with no buyers," said Tushar Patni, director of Ajanta Jewellers.
"Gold prices were also higher and usually during Ramadan we see less buying. Last year was an exception because in August prices were really low," he said.
The average price of gold in August last year was 82 dirhams per gram. Expatriates who comprise the majority population in Abu Dhabi, capital of the UAE, go on annual holiday in July and August.
"Jewellery sales were poor, we expected that. But gold became expensive and those who wanted to buy must have postponed purchases," said the manager of Joy Alukkas Jewellery that has three outlets in Abu Dhabi.
Abu Dhabi has some 85 gold shops and its own jewellery manufacturers. Imports, however, make up almost 60 percent of all jewellery sold at retail outlets. (Reuters)