World Gold Council announces 21% increase in UAE gold sales for Q3 2007

Sales figures in the UAE increased from Dhs2bn in the third quarter of 2006 to Dhs2.5bn in the third quarter of 2007.

On the other hand, the table below demonstrates that the UAE gold consumption in terms of tonnage increased from 23.9 tonnes in Q3 of 2006 to 26.3 tonnes in the same period of 2007 contributing to a 10% increase.

Demand remained strong throughout the Middle East increasing by 19% in Saudi Arabia, 15% in Egypt and 3% in other Gulf countries combined. The strong economies in the Arabian Peninsula and a recovering economy in Egypt, together with the favourable price environment for jewellery buying in the first two months of the quarter, easily outweighed the negative impact of the price rise in September.

The World Gold Council's report revealed that jewellery demand was strong though the quarter, and despite the steep rises in prices which had an impact on key markets, jewellery demand rose in tonnage and value terms.

Commenting on the third quarter results in the region, Mr. Moaz Barakat - Managing Director of the World Gold Council in the Middle East, Turkey and Pakistan said: 'It is clear that gold's safe haven and hedging characteristics have been a major attraction to investors during this period of instability, greater inflationary fears and a falling dollar. We are delighted to see overall demand for gold rise very strongly on last year. We also believe that investor interest will remain very strong in the near future and that as the price stabilises, major gold jewellery buying consumers will adapt to a higher floor in the price.'

Mr. Barakat added: 'The positive effect of the marketing and promotional campaigns held by the World Gold Council and its partners from the gold traders in several countries in the region has been very much apparent and had a positive impact on keeping the industry and gold jewellery demand healthy despite the rise in gold price.'

A combination of strong economies with rising wealth, favourable price trends for most of the quarter and increased promotional spending, notably by the jewellery trade, were the main factors underlying a 13% increase in consumer demand to 93.2 tonnes in the region as a whole compared to a year earlier (jewellery up 14%, and net retail investment up 9%).

The UAE continued to enjoy a booming economy. The Summer Surprises festival was again a success and the number of tourists once again increased sharply, all helping to increase the jewellery demand by 11% and total consumer demand by 10%.

Saudi Arabia also enjoyed an economic boom. Although based on high oil prices, much of the direct impetus to growth is coming from increased government spending on infrastructure and social projects and this is in turn is generating higher incomes throughout the country and thus supporting consumer spending including that on luxury products such as gold jewellery. The reduction in customs duty on imported jewellery from 12% to 5% which took effect in March is helping to improve the range of products on offer.

Recovery continued in Egypt with jewellery demand 15% higher than a year earlier. The third quarter jewellery demand was the highest since 2002 in tonnage terms. The country enjoyed a good tourist season during the summer with a number of wealthy Middle East tourists diverted to Egypt from their normal vacation in Lebanon due to the ongoing political tensions.