Dubai reported a 30 per cent increase in gold sales from 2006 to 2007 – despite record price highs for the yellow metal – thanks to gold and jewellery retailers in the emirate taking measures to boost sales, industry leaders attending the sixth annual Dubai City of Gold Conference said.
Speakers at the two-day conference being held at Dubai’s Park Hyatt hotel, added that high prices reiterate the gold’s core investment value.
However, they added, that the jewellery trade had been hit by the sharp decline in the mass and middle-class jewellery market.
Delivering a keynote speech, Sultan bin Saeed Al Mansouri (pictured above), UAE Minister of Economy, said that despite fluctuating gold prices, the local jewellery sector was sustained by the renewed interest in diamonds and other forms of jewellery. He added that the region’s spending power was sustaining the strong performance of trade in Dubai.
“Dubai is a well established centre for gold bullion and both wholesale and retail jewellery catering to the Arab and Indian markets – the world’s top gold markets – where population growth is driving demand for every type of jewellery,” Al Mansouri said.
In 2007, 10 per cent of Dubai’s GDP was derived from gold and jewellery revenues, he added.
Dubai’s Strategic Plan for 2015 targets a GDP growth of 11 per cent towards 2015 and the gold and jewellery trade will be a major driver of economic diversification.
In 2007, Dubai imported 559 tonnes of gold – 14 per cent more than the 489 tonnes in 2006. Gold re-export from Dubai too went up from 274 tonnes in 2006 to 287 tonnes last year.
Al Mansouri also revealed that diamonds and diamond jewellery worth $11.23bn (Dh41.25bn) were sold in Dubai in 2007, posting a 53 per cent growth over 2006.
'Prices will not fall until well into 2009'
Dr Paul Walker, CEO of Gold GFMS Ltd, revealed – quoting a GFMS Survey – that the total worldwide gold supply in 2007 declined by 1.7 per cent, from 3,982 tonnes to 3,912 tonnes. Official sector gold sales went up by 30 per cent, but a modest 10 tonne decline pushed gold mine output to an 11-year low.
He said the last four months of 2007 saw dramatic inflow of funds into gold but demand in the rest of the year was unimpressive.
The market was dominated by institutional and high net worth investors who bought gold as a safe haven, soon after the sub-prime credit crisis erupted. Continued investor interest will be the principal driver of the continued gold price rally to a high above the $1,000 per ounce mark, Walker predicted.
“Imbalances in the market suggest that sooner or later, gold price will have to fall. This is most unlikely to occur in 2008, though, and potentially not until well into 2009,” he said.
Dubai gold sales up by 30 per cent