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July gold sales in Dubai surge 30 per cent as prices decline

DUBAI - Gold jewellery sales volume in Dubai rose 30 per cent in July on relatively lower prices for the precious metal and expatriate demand, a senior gold industry executive in the Gulf Arab emirate said on Tuesday.

'It has been a quite good month for the market and volume alone rose by about 30 per cent compared with July last year,' Tawhid Abdullah, Managing Director of the Dubai Gold and Jewellery Group told Reuters.

A large chunk of Dubai's expatriate community, mainly from the Indian subcontinent, spend part of their savings to buy jewellery and bullion gifts before they head home for summer holidays.

'Also if you look at this month, so far sales figures are high and I think by the end of this quarter we will see a 20 per cent increase and the current prices are encouraging more buyers to get into the market,' he said.

Gold powered to a record of $1,030.80 an ounce on March 17 on record crude oil prices, fears of inflation, and expectations of interest rate cuts in the United States, making the metal more attractive as an alternative investment.

Gold has since tumbled to $801.90 an ounce on Tuesday, its weakest in almost eight months in volatile trading, losing its safe-haven appeal as investors shifted some of their money back to the US dollar and oil further retreated from record highs.

Dubai's second-quarter gold imports fell 2.1 per cent to 143 tonnes, compared with a year ago, and exports plummeted 15.8 per cent to 64 tonnes, figures from the Dubai Multi Commodities Centre (DMCC) showed on Saturday. Its total gold imports for the first half of 2008 were down 4.7 per cent, at 265 tonnes. Total exports during the same period rose 26.1 per cent to 179 tonnes, the DMCC said.

Declines in sales volume of gold jewellery sales and bullion imports earlier this year deepened anxiety among traders that the emirate may lose its lustre as a regional gold hub. 'The drop in imports was happening globally, and compared to other regions, the performance of the Dubai market was very positive,' Abdullah said.

The Gulf Arab emirate is a long-established market for gold bullion and jewellery - wholesale and retail - fuelled by strong demand from the Arab world and India.

Tax-free jewellery in Dubai, one of seven members of the United Arab Emirates federation and the Gulf's commercial heart, lures many Gulf Arab and Western tourists. Traders said India's June to September monsoon season, the prelude to the start of the country's main wedding season, was also boosting demand in Dubai.

The emirate has the highest concentration of jewellery shops in the world, generating sales worth $35 billion last year - 20 per cent of the $173 billion total global jewellery trade.