UAE gold sales increased to 3.6 billion dirham ($980 million) in the Q2 of 2008, an increase of 20% compared to 3 billion dirham in Q2 of 2007, according to the World Gold Council, Dubai.
“Normally, when prices are volatile people don’t purchase gold. But since March, prices have stabilized and shoppers have got used to the high prices. They are returning to their purchasing patterns,” Swapna Nair, general manager of Dubai Gold and Jewellery Group (DGJG), told Gulf News. “The main consumers are from the subcontinent and they are very price sensitive. Since the prices have been falling for the past ten days, sales have shot up through the roof,” Nair said.
The high and volatile gold price continued to dampen demand in tonnage terms during Q2, particularly for jewellery. While the average gold price, at $896.29 per ounce, was well below the peak of $1,011 per ounce seen in mid-March, it nevertheless represented a 34% rise on the average price of Q2 of 2007.
The UAE’s year-on-year demand fell 11% and 15% for Saudi Arabia and 24% for other Gulf countries. Jewellery demand in the Middle East, which accounts for more than 90% of total offtake in the region, was 12% lower in tonnage terms in the Q2 of 2008 compared to the previous year. “Dubai thrives on high volumes and low margins. It is one of the best gold markets due to the purity and variety of the jewellery available as well as fixed making charges,” Nair said.
An increase in tourists to Dubai had a positive influence on jewellery demand, especially towards the end of the quarter due to Dubai Summer Surprises. “This year, the tourist inflow is slightly lower than the last year. But in the past 10-15 days, they have picked up,” she said. She added that sales of retail investment products like gold bars have also increased recently. People have realized that it is a good investment, she said.
In the UAE, investment demand eased back from a very strong March quarter, but remains well above the levels of last year. James Burton, CEO of World Gold Council said: "Consumers are continuing to spend more money on gold, even if they no longer get as much of it. This reinforces the positive attitude and buying intentions of consumers, and indicates that despite price increases, gold demand remains robust." (Gulf News)