He attributed this to decline in gold smuggling into the kingdom, strict implementation of customs laws and the well secured Saudi border points because of the kingdom's anti-terrorism drive.

Alwazir said the smuggling of gold and jewellery into Saudi Arabia diminished to five tons so far this year as compared to 50 tons in 2003. He said that another reason that helped the gold market to stay buoyant was the recent 15 per cent salary increase announced by Custodian of the Two Holy Mosques King Abdullah bin Abulaziz.

Addressing newsmen in Riyadh after Abdulrahman Al Jeraisy, president of the Riyadh Chamber of Commerce and Industry (RCCI) opened the First International Gold and Jewellery Exhibition at Faisalia Hotel on Tuesday; Alwazir said the kingdom's consumption in 2004 stood at 134 tons of pure gold.

"This is an important exhibition for Saudi Arabia, which has emerged as a competitive world centre for gold trade and for the local manufacturing and designing of gold and diamond jewellery," said Osama Kurdi, a Shoura Council member.

Around 50 leading gold and jewellery companies, 11 from abroad participated in the five-day show after Saudi authorities lifted a more than 20-year ban on organising international gold events in the kingdom.

Sulaiman Al-Othaim, a leading jeweller, said the total size of Saudi gold market stood at $4 billion, with customers who are selective in buying jewellery.

He said the kingdom is also exporting around 25 per cent of its total production of four tons of gold, 10,000 pieces of diamond-studded jewellery and 24,000 pieces of gold ornaments to other GCC countries.

Alwazir said following the increase in gold price in the international market the demand for gold did not decrease in Saudi Arabia. The windfall from the high oil price in the international market gave the people more money to invest in gold purchases.

About the exhibition, he said that with about 50 participants from 11 countries, including Saudi Arabia, it was a small event compared to similar shows organised in Dubai or Bahrain, where more than 200 companies participated.

He said that a number of international participants complained of long delays in customs clearance at Riyadh airport.

Mahmood Abu-Zaid, area manager of UAE-based Damas Jewellery, said the customs officials checked each piece of gold and jewellery his company brought for the show.

He said Damas has been participating in several such events and has never experienced such problems from customs officials.

"If a company brings 1,000 pieces the officials check only the sample pieces from each category and not every piece based on the inventory," he said.

"The officials here have also seized the brochures, which showed women models wearing gems and jewellery ornaments, which forms the backbone of marketing tools for any company," he added.

Abu-Zaid said that because of the long delay in customs clearance his staff could not have enough time for arranging the exhibits at their booth properly.

Alwazir said a number of other international participants also complained of long delays at the customs clearance in Riyadh. He said WGC will organise a better and bigger event in the kingdom next year.

Al-Jeraisy said the exhibition showcased some of the high-quality Saudi products in gems and jewellery. He said the exhibition, will help enhance the Saudi gold and jewellery exports in the international market.