Retail gold sales volumes in Abu Dhabi and Dubai slightly improved in April on the year and are expected to improve further as summer vacations begin, retailers told Reuters on Wednesday.
But high prices for the yellow metal continue to cap demand growth in the retail market as cash strapped consumers await a drop in prices to buy new jewellery.
Tushar Patni, director, Ajanta Jewellers, one of the largest retailers in Abu Dhabi, said: "Demand for April was slightly better than last year but still is not strong."
He added: "I think that things will start to improve in the coming summer months as people go back to their home countries with gifts for the family."
Spot gold rallied nearly 6 percent in April as concern over Greece's ability to deal with its debts sent investors flocking to bullion.
On Wednesday it traded at around $1,167.15, off a record of over $1,226 hit in Dec 3.
Branded as the city of gold, Dubai's gold sales also showed signs of a slight improvement in April, retailers said.
Chandu Siroya, vice chairman, Dubai Gold and Jewellery Group, said: "Consumers are starting to get used to the high prices of gold but the problem is in the fluctuations in the price." The Dubai Gold and Jewellery Group is an industry body which represents more than 800 retailers.
Unlike Abu Dhabi, jewellers in Dubai depend on tourists for at least 50 percent of their sales, said Siroya.
He added: "There's an overall decrease in the number of tourists visiting jewellery shops and there is also a decrease in the purchasing power especially among western visitors."
Similar to retailers in Abu Dhabi, those in Dubai believe sales will increase for the coming summer months.
A salesman at Hem's Jewellery at Dubai's old gold souk said: "Many Indian families go back in the summer and buy gold for their loved ones back home, so even though we are not seeing many tourists the summer holidays might still be a good time for us."
Demand in the UAE fell 33 percent in the full year 2009, a little higher than the average fall of 31 percent recorded across Gulf Arab states, the World Gold Council said in February.
Retail gold in the Gulf region represents 10 percent of the global market with a value of $14.5 billion, according to Dubai Gold and Jewellery Group data. (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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