Sep 3, 2009
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Dubai gold sales drop as price remains high

Sep 3, 2009

DUBAI, Sept 3 (Reuters) - Gold jewellery sales in Dubai fell around 30 percent in August, compared with a year earlier, as high gold prices and an economic downturn deterred buyers, retailers said on Thursday 3 September.

Dubai's gold retailers are seeing sale volumes drop as prices of the metal are boosted by institutional funds seeking a safe haven for their assets during the global economic slowdown.

"Our sales in August have dropped by around 30 percent from last year because the price of gold is too high for (retail) consumers during this crisis," said Sanjay Brahatti, co-owner of Al Khaledyah Jewellery, which is based in Dubai's old gold souk and has five branches.

"And if things continue like this over the coming two months, we are thinking about cutting down the number of branches to ease costs," he said.

Gold XAU= has risen by more than a quarter to about $980 an ounce on Thursday 3 September from a low of $773.90 in August last year. In October it dipped to a one-year low of $680.80.

A decline in the numbers of tourists visiting the emirate had also contributed to the fall in sales, as they make up a large part of demand.

"There are far less tourists this year compared to last year and this, with the high gold prices, has really hit business bad," said Hassan Salah, account manager at Kaloti Jewellery, a retail gold wholesaler in Dubai.

Improved demand is expected during November and December, said a sales manager at Sparkling Ambience Jewellery at the Dubai Mall.

"Things are really bad now, but hopefully with the Christmas holiday season coming up, people will start buying jewellery as gifts," he said.

Total demand for gold in the Middle East region fell by 18 percent in the second quarter of this year to 72 tonnes, after being up 33 percent in the previous quarter, according to a report released by the World Gold Council (WGC) in August.

The investment component of demand fell 31 percent to 3.8 tonnes, while jewellery off-take was 17 percent below second-quarter 2008 levels at 68 tonnes, it added.

In the Gulf region, retail gold sales fell 17 percent during the second quarter of this year, compared with the same period in 2008, said Rozanna Wozniak, investment research manger at the WGC.

In the United Arab Emirates, retail gold volume was down 18 percent in the second quarter compared with the same period last year, she added. "And I believe we can only see a recovery in these traditional markets if the price drops, only then people will start repurchasing gold they have sold."

(By Amena Bakr. Editing by Anthony Barker)

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