Capital's gold trading steady in summer lull

Abu Dhabi's gold demand was steady in July as many buyers were away on holiday, but trading was expected to pick up after a summer lull, Abu Dhabi Gold and Jewellery Group's chief said yesterday.

"This is the beginning of a seasonal downturn we have every year as many of our buyers have already left the country for their long holidays," the industry group's chairman Tushar Patni said.

"But we are still seeing a healthy market as sales volume was almost steady last month, and value rose by almost 15 per cent on the relatively high gold prices," he told Reuters.

Abu dhabi's gold sales value rose 40 per cent in June, and 15 per cent in the second quarter of the year as many foreign workers, mainly from the Indian subcontinent, spent part of their savings to buy jewellery and bullion gifts for family and friends before they go home for holidays.

The precious metal powered to a record of $1,030.80 (Dh3,703) an ounce on March 17 on record-high crude oil, fears of inflation and expectations of more rate cuts in the United States, making the metal more attractive as an alternative investment. Spot gold closed at $909.55 an ounce in Europe on Friday.

"Buyers are okay with prices around $900 or $950 an ounce, and once the summer period is over and everyone is back in business demand could pick up significantly as there is still bullish sentiment in the market," Tushar said.

Tax-free jewellery shopping in the UAE lures many Gulf and Western tourists.

Abu Dhabi has about 110 gold shops and its own jewellery manufacturers. Imports, however, make up almost 60 per cent of all the jewellery sold at retail outlets.

In Dubai, gold jewellery sales volume rose 17 per cent in June after picking up by about 15 per cent in the second quarter on expatriate demand, Tawhid Abdullah, managing director of the Dubai Gold and Jewellery Group, said last month.

Demand in the Gulf Arab country fell 19.3 per cent to 24.2 tonnes in the first quarter of 2008, the industry-funded World Gold Council said in May.

The value of gold sales in the country rose 15.1 per cent to $862 million during the same period.