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Wed 18 Jun 2008 04:50 PM

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Dubai gold sales climb 18% as price eases

Traders see healthy gold jewellery sales volume in May on less volatile, lower prices.

Dubai's gold jewellery sales volume rose 18 percent last month on relatively less volatile and lower gold prices, a senior gold industry executive in the Gulf Arab emirate said on Wednesday.

"So far prices are OK for buyers and not as high as they used to be in March," Tawhid Abdullah, managing director of the Dubai Gold and Jewellery Group told newswire Reuters.

"Looking at the market now, I would say that the 18 percent increase we saw in May is a sign that Dubai gold sales will continue to grow for the rest of the year," he said.

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

Gold has since fallen and traded around $884 an ounce on Wednesday as sliding oil prices reduced the metal's appeal as a hedge against inflation.

Lower gold prices and strong Indian demand have pushed the volume of gold jewellery sales in Dubai in April 17 percent.

Dubai 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 Dubai, one of seven members of the United Arab Emirates federation and the Gulf's commercial heart, lures many Gulf Arab and Western tourists.

Demand in the UAE fell 19.3 percent to 24.2 tonnes in the first quarter of 2008, the industry-funded World Gold Council said in May.

The value of gold sales in the UAE rose 15.1 percent to $862 million during the same period.

In UAE capital Abu Dhabi gold sale volumes were steady in May but demand from expatriates buying gifts ahead of summer vacations at home was expected to boost sales in coming months, the emirate's Gold and Jewellery Group said earlier this month. (Reuters)

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