The pace of gold sales in Dubai slowed in September as a rally in world market prices dented demand for the metal, a top industry executive said on Monday.
With the lower volumes outweighing the rise in prices, the growth in the overall value of sales year-on-year was put at 13% in September, down from 26% growth in August.
"The sudden rise of gold prices has affected sales in September," Tawhid Abdullah, managing director of the Dubai Gold and Jewellery Group told Reuters.
"We were expecting to see a 40% increase. But the market is re-adjusting to the current prices, and October will be a better month."
Spot gold rallied to $747.65 an ounce on last Monday, its highest level since January 1980. Concerns about the US economy and the weakness of the dollar encouraged investors to buy gold, often seen by investors as a safe asset.
Dubai, known as the City of Gold, saw the value of gold sales in the third quarter rise 26% on the year, Abdullah said.
Dubai is a long-established market for gold bullion and jewellery, wholesale and retail, fuelled by strong demand from the Arab world and India, the world's main gold market.
Tax-free jewellery in the UAE's gold souks and shopping malls draws Gulf Arab and Western tourists.
Some local traders feared gold sales volume in the UAE could fall by about 10% in volume in 2007, as they did in the previous year due to both volatile and high prices.
In the emirate of the capital Abu Dhabi, a much smaller market than Dubai, gold sales volume fell 20% in September on the year.
But there was little sign of a similar contraction in Dubai, Abdullah said.
"I still don't see either the value or volume of gold sales going down this year. For instance, at the moment many customers are upping their purchases as we approach eid," Abdullah said.
Ramadan, which started on September 13, is a month of fasting for Muslims and ends with the eid feast when many couples marry.
Record gold prices have led to an increase in the flow of scrap gold coming onto the market in Dubai in recent weeks, industry sources said on Saturday.For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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