Total Middle East gold consumption increased from 315.6 tonnes to 348.4 tonnes, a 10 per cent increase. The World Gold Council’s (WGC) regional office in Dubai announced the UAE gold jewellery consumption increased by eight per cent in 2007 compared in value to 2006 despite the 15 per cent increase in gold price.
The retail gold sales increased by 24 per cent in 2007 in UAE, 33 per cent in Saudi Arabia, 29 per cent in Egypt and 19 per cent in the other Gulf countries.
Gold consumption (jewellery and investment) in terms of tonnage rose from 315.6 tonnes in 2006 to 348.4 tonnes in 2007.
High and volatile gold prices had a major impact on the fourth quarter of 2007.
Gold jewellery consumption dropped by 9 per cent in the UAE, 10 per cent in Saudi Arabia, and 11 per cent in other Gulf countries in the fourth quarter.
The effect of the gold price increase is worldwide and had an effect on tonnage terms from year-earlier levels. This trend was most keenly felt in India, the world’s largest and also most price sensitive gold market, where demand fell 64 per cent on year earlier levels follow 40 per cent growth in the first three quarters. The US was also negatively impacted with a combination of a weak economy, poor retail environment and record prices denting jewellery demand which stood 14 per cent down on 2006 figures.
The Middle East was far less extreme as the demand was not drastically affected as the rest of the regions.
In addition for the year demand increased in the region and Egypt was an exception in fourth quarter with demand rising on the back of economic recovery resulting in 12 per cent growth. Moaz Barakat, Managing Director of the WGC in the Middle East, Turkey and Pakistan, said: “Comparing the Gulf performance to the rest of the region, we are delighted to see that the high and volatile gold prices did not affect the gold market. Despite the shortfall in tonnage in the recent months, the annual figure reflects a positive outlook.
“Gold’s safe haven and hedging characteristics have been a major attraction for investors during this period of instability, greater inflationary fears and falling dollar. Investor interest will remain strong in the near future and as the price stabilises, major gold jewellery buying consumers will adapt to a higher floor in the price.”
The effect of marketing and promotional gold jewellery campaigns are more important now than ever. The continuous efforts of the WGC and its partners from the gold trade in the region have been apparent on maintaining a healthy gold market environment.
On an international level, there were very positive stories in three key gold markets. In China total consumer demand reached 326 tonnes, 26 per cent above 2006 levels. China has now overtaken the US as the second largest volume retail market for gold jewellery after India, with demand for jewellery reaching 302 tonnes and surpassing 300 tonnes for the first time since 1997. In Turkey, 2007 brought record overall demand for gold.
Jewellery demand was, at 188 tonnes, the second highest annual figure ever, up 14 per cent on 2006. Net retail investment demand was up two per cent on 2006 at 61 tonnes. Strong growth continued in Russia with jewellery demand rising to a record 11 per cent.
Growth remained vibrant with demand in fourth quarter nearly 25 per cent higher than a year earlier – making Russia the fastest growing country for the quarter.
Follow Emirates 24|7 on Google News.