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Wed 21 May 2008 10:23 AM

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Dubai gold sales climb 17% on Indian demand

Sales for April rise as prices ease off record highs seen earlier in year - industry exec.

Dubai's gold jewellery sales volumes rose 17% last month on strong Indian demand and less volatile prices, a top industry executive in the Gulf Arab emirate said on Tuesday.

"The prices are relatively less volatile and lower than what they used to be in March, which is making buyers in the market more comfortable," Tawhid Abdullah, managing director of the Dubai Gold and Jewellery Group, told newswire Reuters.

"Demand from India, though not very high, has also contributed to the 17% rise we saw last month, and I think May will see higher sales figures," he said in an interview.

Sluggish gold sales during India's Akshaya Tritiya festival, normally seen as an auspicious time to buy the metal, provide the latest evidence of high prices hurting demand from the world's top consumer, analysts and traders have said.

Gold powered to a record of $1,030.80 an ounce on March 17 on record-high crude oil, fears of inflation and expectations of more rate cuts in the US, making the metal more attractive as an alternative investment.

Gold has since fallen and stood around $907 an ounce on Tuesday.

Dubai's gold jewellery sales volumes rose 12% last month and 5% in the first quarter of the year as buyers adjusted to high prices, but traders said the recovery was likely to be short-lived if prices remained volatile.

"So far the market is showing strong recovery signs and buyers are used to the $900 price level," Abdullah said.

Dubai, known as the "City of Gold", is a long-established market for gold bullion and jewellery, wholesale and retail, fuelled by strong demand from the Arab world and India.

Tax-free jewellery in the Gulf commercial heart lures many Gulf Arab and Western tourists.

The UAE's full-year 2007 gold demand rose 8% to 99.8 tonnes, but it fell 8.1% to 19.3 tonnes in the fourth quarter.

In Abu Dhabi, gold jewellery sales rose 10% in volume and 20% in value in April compared with the year-ago period on demand by foreign residents, the emirate's Gold and Jewellery Group chairman said earlier this month. (Reuters)

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