Gold rush in UAE: Indians buying more gold at lower prices

UAE residents and tourists bought more gold at lower prices in the first quarter of this year compared to the same quarter last year due to a substantial drop in prices, according to latest official figures.

The shining factor for the strong demand for the gold was higher demand from India, the world’s largest consumer of gold, the World Gold Council said in its quarterly update.

Jewellery demand in the UAE surged in the first quarter of 2014 due to lower prices and stronger demand from gold-hungry India.

World Gold Council said it “continues to view India as a source of strong latent demand, which will be unleashed as and when the government restrictions on gold are eased. Indicative of this is the strength of demand in the UAE, which can be taken as a proxy for Indian demand given the prevalence of non-resident Indians among the gold-buying populace.

“Demand of 22.1t from the UAE was the highest quarterly total since the record of Q3 2008. Given that this market is not constrained by the same supply controls that are currently in place in India, the demand response in the first quarter can be considered to be representative of how domestic Indian consumers may have responded to lower gold prices.”

Total UAE demand for gold – which includes jewellery, bar and coin – jumped 16 per cent to 25.4 tonnes in Q1 2014 from 22 tonnes in Q1 2013. Total value of gold sold in the quarter fell 8 per cent to $1.056 billion (Dh3.875bn) compared to $1.152bn (Dh4.22bn) in Q1 2013.

According to statistics released by World Gold Council, jewellery demand in the UAE rose 18 per cent to 22.1 tonnes compared to 18.8 tonnes for the same quarter last year. Despite the increase in volume, the total value of jewellery sold in Q1 2014 dropped 7 per cent to $919 million (Dh3.37 billion) from $986m (Dh3.62bn) in Q1 2013.

Total demand volume of bar and coins rose 5 per cent to 3.3 tonnes in Q1 2014 from 3.2 tonnes in Q1 2013. Total value of bar and coins sold in Q1 2014 plunged 17 per cent to $137 million (Dh503 million) from $165 million (Dh 605 million) in Q1 2013.

Globally, Q1 gold demand held steady at 1,074.5 tonnes, maintaining the lofty levels seen last year. Modest growth in jewellery outweighed minor reductions in technology demand and central bank purchases. In the investment space, net ETF flows were zero, while bar and coin demand was well below a year earlier.

The value of demand declined to $44.7bn (Dh164bn) due to the impact of lower gold prices.

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