Dubai's shopping festival is expected to help boost gold jewellery sales in the Gulf emirate, but a new surge in prices may dampen demand, jewellers and officials said on Sunday.
Visitors to the month-long promotional festival from energy-rich states such as Saudi Arabia are flocking to Dubai's gold souk and malls to snap up locally made jewellery as well as international brands.
"This year we expect gold sales to rise by almost 40% during Dubai Shopping Festival," Tawhid Abdullah, general manager of the Dubai Gold and Jewellery Group, told newswire Reuters.
"Last year, gold sales were up by more than 45% during the festival period."
Dubai is a long-established market for gold bullion and wholesale and retail jewellery, where the trade is fuelled by strong demand from the Arab world and India, the world's number-one gold market.
Soaring gold prices have weighed on sales of the yellow metal for jewellery, deterring buyers and depressing the value of sales by 30% in the fourth quarter of 2007.
"Earlier this month, we saw some buyers coming in when prices went below $900 and it looked like they may stay at this level," a jeweller said.
"But the sales increase we may see due to the shopping festival will slow again if prices go higher as buyers will take some time to adjust to the new prices," he added.
Gold broke to a record high $923.40 an ounce last week, as investors rush to park their funds in the safe haven of gold amid equity and credit market woes.
"We are not that worried about prices during the shopping festival when we always receive keen buyers, mainly tourists," a gold wholesaler said.
The precious metal rose more than 30% in 2007 amid safe-haven buying due to credit market turmoil and worries about the health of the US economy, which sent the dollar to record lows, as well as record high oil prices.
Traders say they expect gold jewellery retail demand to be upbeat after the shopping festival, which started on Thursday, if prices drop below $900 an ounce.
Dubai's gold imports rose 14.3% to 559 tonnes in 2007, while exports rose 4.7% to 287 tonnes as investor appetite for the precious metal stayed strong despite record prices, the Dubai Multi Commodities Exchange said on Saturday.
In 2007, gold sales for jewellery and investment in the UAE rose by almost 12% in volume and 20% in value from the year before as tourism grew, the World Gold Council has said. (Reuters)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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