Total Middle East gold consumption increases from 315.6 tonnes to 348.4 contributing to 10% increase

The retail gold sales increased by 24% in 2007 in UAE, 33% in KSA, 29% in Egypt and 19% in the other Gulf countries.

The gold jewellery consumption in tonnage, however, the total gold consumption (jewellery & investment) in terms of tonnage increased from 315.6 in 2006 to 348.4 tonnes in 2007.

High and volatile gold prices had a major impact on the fourth quarter of 2007. The gold jewellery consumption dropped by 9% in the UAE, 10% in KSA, and 11% in other Gulf countries.
The effect of the gold price increase is world wide 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% on year earlier levels follow 40% 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% down on 2006 figures. The Middle East showed a far less extreme as the demand was not drastically affected as the rest of the regions. In addition for the year as a whole demand increased in the M.E and Egypt specifically was an exception in Q4 with demand rising on the back of economic recovery resulting in 12% growth for the year as a whole.

Commenting on the results in the region, Mr. Moaz Barakat – Managing Director of the World Gold Council in the Middle East, Turkey and Pakistan said: “Comparing the Middle East 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 to the extreme as per the other regions. Despite the shortfall in tonnage in the recent months, the annual figure reflects a positive outlook.'

Barakat added, 'Gold's safe haven and hedging characteristics have been a major attraction to investors during this period of instability, greater inflationary fears and falling dollar.
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.'

The effect of marketing and promotional gold jewellery campaigns are more important now than ever. The continuous efforts that the World Gold Council and its partners from the gold trade in several countries 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% 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% on 2006. Net retail investment demand was up 2% on 2006 at 61 tonnes. Strong growth continued in Russia with jewellery demand rising 11% to set a further annual record. Growth remained vibrant throughout the year with demand in Q4 nearly 25% higher than a year earlier – making Russia the fastest growing country for the quarter.