Gold trade through Dubai reached $7bn (Dh25.69bn) in the first quarter, up 71.5 per cent from the same period a year earlier.
But Dubai's first quarter gold imports dropped 7.6 per cent to 122 tonnes compared to the same period in 2007, as bullion prices rose to a record above $1,000 an ounce, the Dubai Multi Commodities Centre (DMCC) said yesterday. Gold exports in Dubai surged 74.2 per cent to 115 tonnes, the DMCC said in a statement.
"With global gold prices crossing the $1,000 mark and remaining significantly high throughout 2007, there has been an impact on the volume of imports," Ian MacDonald, DMCC's Executive Director for gold and precious metals, said in the statement. "But with scrap becoming an important component of imports, the emirate's growing significance as a gold refining centre has been emphasised."
Spot gold powered to a record of $1,030.80 an ounce on March 17 on record-high crude oil, fears of inflation and expectations of more rate cuts in the US, making the metal more attractive as an alternative investment.
The yellow metal has since fallen, but bounced on Friday after a drop from a one-month high spurred buying from bargain hunters, but jewellers stayed on the sidelines, awaiting clues from the energy market.
Gold is seen as a safe-haven metal and as a hedge against inflation. The metal is also influenced by oil, currency moves, and generally trades in the opposite direction of the dollar.
Dubai is a long-established market for gold bullion and wholesale and retail jewellery, where the trade is fuelled by strong demand from the Arab World and India, the world's number one gold market. Last year, the Gulf commercial hub's gold imports reached 559 tonnes on investors' appetite for the precious metal, while exports hit 287 tonnes. Tax-free jewellery in the gold souks and shopping malls in the UAE draws Gulf and Western tourists.
Drops in sales volume of gold jewellery earlier this year have deepened anxieties among traders that the emirate may lose its lustre as a regional gold hub.
Traders fear that high and volatile prices could scare off gold jewellery buyers in Dubai, but industry experts say imports could rise above last year's level despite price volatility.
"Dubai is largely a trade centre than a net consumer of gold, and price volatilities do not generally hamper gold imports," said Pradeep Unni, assistant vice president of Vision Commodities Services. "If the current bullishness in gold sustains, I wouldn't be surprised to see gold imports crossing the 560 tonne mark," he said.
Purchases for gold jewellery and investment in the UAE fell 19.3 per cent to 24.2 tonnes in the first quarter of 2008, the World Gold Council said on Wednesday.
Value of gold sales in the country rose 15.1 per cent to $862 million (Dh3.16bn) during the same period, the industry-funded group added.