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Tue 16 Aug 2011 09:51 AM

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Dubai traders report 100% rise in gold bullion sales

Gold seen as wealth insurance amid market turmoil in Europe and the US

Dubai traders report 100% rise in gold bullion sales
Gold hit a record $1,813.79 an ounce on Thursday as global economic woes spurred demand

Dubai’s gold traders have reported a 100 percent rise in the number of customers buying gold bullion as investors move to seek shelter from US and euro zone debt woes.

Gold has long been seen as a safe haven buy by Asian investors, but traders in Dubai’s gold souqs have reported a steady increase in sales across all nationalities.

“Traditionally Indian people bought more gold but now almost every nationality I can think of has bought gold bullion,” said Chetan Dhakan of National Jewellery.

“I would say in the past six months it has least doubled; before I used to get one or two customers [buying bullion], now it’s at least four to five customers per day.”

Gold has surged 24 percent in 2011, set for an 11th year of gains, as the debt crisis in Europe, slower US growth and inflation in China have boosted investor and central-bank demand.

Gold hit a record $1,813.79 an ounce on Thursday and posted its biggest weekly gain since April 2009 as European and US stock markets plummeted amid concerns over debt levels.

The metal dropped from its all-time high this week, with spot gold valued at $1,744.21 an ounce on Monday and US gold at $1,747, prompting physical buyers to come back into the market.

“Right now we are selling more gold. Yesterday one customer bought 1kg of gold,” said Dubai-based Cara Jewellers.

The second half of the year is a traditional peak season for purchasing gold in China, India and the Middle East thanks to wedding and festival season, and the onset of Eid Al-Fitr.

“There has been a major change in the gold market over the last month or two… it did start in July and has continued in force through August. We’ve seen very strong growth in recent week of buying of coins and bars by Europeans,” said Neil Gregson, portfolio manager, Global Equities Team,  JP Morgan London.

“The hedge funds are there but the dominance has been a retail buying, buying coins and bars.”

Dubai Multi Commodities Centre Authority on Monday unveiled a prototype of the UAE’s first gold bullion that it hopes will eventually serve as legal tender.  

“This gold bullion coin was conceived to satisfy the demands from investors seeking access to gold as protection against the ongoing global economic uncertainty,” Ahmed Bin Sulayem, executive chairman of DMCC, said in an emailed statement.

The centre is in discussions with the UAE Central bank to designate the coin as the first legal tender in the UAE and Middle East.

The Dubai Gold and Commodities Exchange on Monday said its year-to-date volumes had surpassed the two million contracts mark on August 12, 2011, the first time since its inception.

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