Lower gold sales as prices soar

Physical demand for gold in the UAE declined in Q3 this year but there has been a simultaneous increase in the value of gold consumers in the country bought due to soaring prices of the yellow metal.

In its Q3, 2010 report, the World Gold Council (WGC) says decline in the UAE (-9 per cent) and Egypt (-8 per cent) was the smallest in volume terms in the Middle East. Saudi Arabia and the other Gulf countries witnessed a drop of 10 per cent year-on-year, the report said.

Tonnage demand in the Middle East declined 11 per cent on a regional basis to 60.4 tonnes from 68 tonnes in the third quarter of 2009.

Even as demand fell in tonnage terms, demand in value terms showed a solid performance, with all countries recording double-digit year-on-year gains.

“Demand across the region followed a similar pattern: healthy demand in July, aided by the wedding season coinciding with a dip in prices, followed by a weak August and September, as Ramadan and price volatility discouraged purchases.

“Across the region, the uplift in demand during July was concentrated in the 21 and 22 carat segments, while demand for lower carat jewellery remained subdued,” says WGC.

Figures show consumer demand in the UAE has shown a slight decline in the third quarter of this year as compared to the same period last year. The WGC figures show consumer demand fell to 17.2 tonnes as against 18.8 tonnes YoY. Net retail investment also fell from 1.6 to 1.3 tonnes for the same period. 

In value terms, the UAE saw an appreciation. From $620 million, the value of the gold consumed in Q3, 2010 rose upto $741 million, registering an increase of 20 per cent. The value of jewellery consumed rose to $678 million in Q3 of this year from $580 million last year over the same period. Net retail investment was up to $63 million to $40 million over the same period.