Justify the rise in price some have $Sales of gold in the UAE increased from 2 billion dirham ($545 million) in the Q3 of 2006 to 2.5 billion dirham ($680 million) in the Q3 of 2007, according to the World Gold Council.
The United Arab Emirates gold consumption in terms of tonnage increased from 23.9 tons in the Q3 of 2006 to 26.3 tons in the same period of 2007, which was a 10% increase. Demand, which remained strong throughout the Middle East, increased by 19% in Saudi Arabia, 15% in Egypt and 3% in other Gulf countries. The strong economies in the Arabian Peninsula and a recovering economy in Egypt, together with the favorable price environment for jewellery buying in the first two months of the quarter, easily outweighed the negative impact of the price rise in September.
Jewellery demand was strong throughout the quarter, and despite the steep rise in prices, which had an impact on key markets, jewellery demand rose in both tonnage and value terms. Overall demand in the Middle East region (the UAE, Saudi Arabia, Kuwait, Bahrain, Oman, Qatar and Egypt) remained strong, showing a 13% increase in consumer demand to 93.2 tons in the region as a whole compared to year earlier (jewellery demand increased by 14%, net retail investment increased by 5%). In dollar terms, this was a 24% increase. Figures released by the World Gold Council showed global demand for gold reached a new record to $20.7 billion, 30% higher than Q3 of 2006.
Total demand reached 947.2 tons. Net retail investment, in contrast, was relatively weak, falling by 1% from year earlier levels, in tonnage terms to 102.7 tons, compared to the Q3 in 2006. Investment in Gold-Backed Exchange Traded Funds (ETFs), and institutional investors became much more active in Q3, at 138 tons, investment in ETFs and similar products were a quarterly record, beating even Q4 2004 (113.4 tons), when the largest ETFs was launched in New York. Total identifiable demand in Q3 2007 was 19% higher than year earlier in tonnage terms; in dollar terms it rose 30% over the same period. Total identifiable investment reached 240.7 tons.
Commenting on the Q3 results in the region, Moaz Barakat, Managing Director of the World Gold Council in the Middle East, Turkey and Pakistan, said: “It is clear that gold’s safe haven and hedging characteristics have been a major attraction to investors during this period of instability, greater inflationary fears and a falling dollar. Overall demand for gold rose very strongly. Investor interest will remain very strong in the near future and as the price stabilizes, major gold jewellery buying consumers will adapt to a higher floor in the price.”
The UAE continued to enjoy a booming economy.
The Dubai Summer Surprises festival was again a success and the number of tourists once again increased sharply, all helping to increase the jewellery demand by 11% and total consumer demand by 10%. Retail gold sales in Dubai increased by 21% in the Q3 of 2007, compared to the same period of 2006.
Saudi Arabia also enjoyed an economic boom. Although based on high oil prices, much of the direct impetus to growth is coming from increased government spending on infrastructure and social projects and this in turn is generating higher incomes throughout the country and thus supporting consumer spending, including that on luxury products such as gold jewellery. The reduction in customs duty on imported jewellery from 12% to 5%, which took effect in March, is helping to improve the range of products on offer.
The world’s largest gold market, India, after the rapid increases recorded in the first half of the year (317.2 tons), saw the third quarter bring a change of pace to gold demand in India. Total consumer demand reached 185.1 tons. Gold, which was range-bound on Tuesday, has lost about 3% since hitting a record high of $914 in January, but long-term sentiments remain strong. (Emirates Business 24-7)
UAE: Gold sales hit $680 million in Q3
24 Jan 2008
bbj.hu