If the slump in demand for gold does not improve in Dubai the closure of some of the city’s legendary jewellers is ‘inevitable’, according to a new report by the World Gold Council.
In the third quarter of 2009, the global demand for gold has dropped 34 percent, according to the World Gold Council (WGC).
However, the UAE was one of the hardest hit regions in the Middle East, with demand for gold jewellery dropping 39 percent in the third quarter year-on-year.
Demand for gold for investment declined even further, down 52 percent.
“The weak result for the latest quarter reflected the combination of the very high gold price, reduced tourist inflows, fewer expatriate workers (in particular workers from India) and the flow-on effects of the property downturn,” the WGC report said.
The report found that the Dubai market was “under pressure” as many of the emirate’s jewellers invested their profits in the property sector, which has declined by nearly 50 percent in the last year.
“Left with cashflow problems, jewellery retailers have been forced to liquidate inventories to meet margin calls and make repayments on gold loans. As yet, there have not been any notable closures of jewellers, but this is probably inevitable if demand conditions do not improve,” the report forecast.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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