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The Gold Souk in Dubai: A stable gold price and expatriates heading home for the holidays helped boost gold sales in the UAE during the second quarter, retailers say.
The Gold Souk in Dubai: A stable gold price and expatriates heading home for the holidays helped boost gold sales in the UAE during the second quarter, retailers say.

Steady bullion supports gold sales

However sales in Dubai from April to June were roughly 20 per cent lower than during the same period the year before.

The country's gold sales decreased by between 10 per cent and 20 per cent in the second quarter compared with the same period last year, but a stable price helped retailers avoid the steep falls of the first three months of the year. Chandu Siroya, the vice chairman of the Dubai Gold and Jewellery Group, said sales in the emirate were 20 per cent lower than the previous year, but this was an improvement on the 30 per cent annual decline in sales in the first quarter. "The gold price being stable helps a lot for the jewellery demand," Mr Siroya said. "If the gold price is always going up and down, then you will defer your gold purchase. But if there is a stable gold price, you'll make your purchases now." Spot gold has hovered between US$860.85 and $986.38 per troy ounce in the past three months. But in the final quarter of last year, the spot gold price fell from a peak of $914.66 on Oct 10 to a low of $695 on Oct 24. "It was very volatile," said Abah Ofon, a commodities analyst with Standard Chartered. "It had large swings down and large swings up. And, overall, the trend was downwards until Jan 2009, when you started getting prices moving back higher again." Spot gold closed at $932.72 on Friday. Tushar Patni, a spokesman for the Abu Dhabi Gold and Jewellery Group, said sales in the capital had also recovered. Gold and jewellery sales between April and June were 10 per cent lower than for the same period last year, but had improved compared with the 20 per cent yearly drop in the first quarter, Mr Patni said. "Ten per cent down was very surprising because we thought it would be down 30, 40 per cent," he said. "But it picked up at the end of May." Mr Patni also credited improved sales to a steady gold price and holiday buying. "People sort of got used to the gold prices, to the higher prices," he said. "And it was time for them to leave for their vacation, so obviously they need to buy something in gold." Despite the stronger sales, gold and jewellery retailers in Dubai say they are having difficulties meeting expenses. "Here in Dubai we believe in very low profit margins for the jewellers," Mr Siroya said. "That is why we always say Dubai is the best place to buy jewellery. But with those low margins, if we don't have the appropriate turnovers, then they struggle." Dubai Summer Surprises, the 62-day festival that started on June 11 with promotions and events to boost retail sales in the summer months, usually helped bring in extra customers to the emirate's gold sellers, Mr Siroya said. And tourists from outside the UAE were just starting to arrive, he said. "We will see the full impact only in the next month, in July and August." aligaya@thenational.ae

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