Turkish demand drives Dubai gold markets

A seasonal demand of gold in Turkey is helping Dubai bring momentum to its gold trade in the stubbornly slow summer months.

Traders in Dubai call this a "seasonal demand" and say it has emerged as a result of local festivals and arrival of tourists in Turkey during the hot and humid months of July, August and September.

It is a custom in Turkey to gift gold in family functions and that has helped traders in Dubai maintain gold exports even as they battled a dwindling number of tourists coming to Dubai. To add to it, Turkey typically sees an inflow of tourists from the Middle East and Europe in the summer months.

Dubai, being the closest located exporter of gold to Turkey, has been able to use this demand to its advantage.

"Celebrations that include events to mark the birth of children have helped several Dubai-based traders continue with exports in otherwise slow summer months. We call this a seasonal demand. And Turkey is the most prominent importer from Dubai these days," said Jeffrey Rhodes, CEO of Dubai- based INTL Commodities.

Rhodes termed the phenomenon, wherein even though the demand for gold globally has subsided but taken an upswing in Turkey, one of the several reflections of "seasonality of gold".

Surprisingly demand for the yellow metal is not high in Australia which is experiencing winters now as the country is more or less self- reliant on gold, said Rhodes.

Gokhan Aksu, a Finance Manager at Goldas Kuyumculuk, one of Turkey's top jewellery producers, had earlier said that he expects an upswing in gold demand in summers this year.

"Towards the summer we could see demand pick up seasonally," said Asku.

The World Gold Council (WGC), which tracks the demand (and the reasons for demand) of gold in different countries, affirmed that while the demand for gold drops worldwide in summers, it picks up in Turkey.

Though updated data regarding the flow of gold into Turkey is not available, the country – the fourth largest consumer of gold in the world – imported 20.8 tonnes of gold in 2007, up 20 per cent from the previous year.

A study by London-based precious metals analyst GFMS said both gold import and export from Turkey have been rising though they took a dip in 2008.

Dubai-based traders pointed out that export of not only bullion bars but even gold jewellery to Turkey has picked up in the past few months.

"The Turkish demand certainly comes as a support to us. We are otherwise suffering because of lack of tourists in Dubai," said a jeweller at Dubai gold hub, the Diera Gold Souq.

Several other traders told Emirates Business that Turkey has also fast emerged as an exporter of jewellery and much of the jewellery seen on the shelves of Dubai's jewellery stores is from Turkey. According to Hurriyet Daily News, a Turkish newspaper, the country exported $1.6 billion (Dh5.87bn) of precious metals and stones during February of this year, the majority of which was gold and jewellery. In contrast, the country exported $5bn in total during the whole of 2008. During the months of January and February this year, Turkey had largely been an exporter, a situation that may now change.

Turkey has steadily emerged to be the world's fourth largest market for gold jewellery, the third largest manufacturing centre and the second biggest exporter. A combination of economic revival and effective promotions saw jewellery demand at a record in 2005, said WGC.

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