18 per cent increase in UAE gold sales in second quarter of 2006 as sales reach 2.3 billion dirham

Due to the rise in gold price, the gold consumption in terms of tonnage in the UAE experienced a drop from 32.9 tonnes in quarter two of 2005 to 25.9 tonnes in the same period of 2006. This drop in the gold consumption in terms of tonnage was also witnessed in other parts of the region. Consumer demand in the UAE wasn't as strong in the second quarter of 2006 as it was in the same period of 2005. As for other Gulf States, the value of demand rose by 10% in the second quarter for the region as a whole, but price volatility hit all markets badly in tonnage terms. In UAE, the demand suffered less due to high tourist numbers in the second quarter as compared to same quarter last year.
Gold demand fell in UAE by 21% reaching 25.9 tons. Total gold demand in other GCC countries (Kuwait, Oman, Bahrain & Qatar) was 10.9 tons.
In Saudi Arabia, gold jewellery demand fell by 28% in tonnage with an increase of 60% in gold retail investment (bars & coins) as compared to the same quarter of 2005. This fall in gold jewellery demand was mainly due to high and volatile gold prices plus the insecure situation of the Saudi stock market since its crash starting end of Feb 2006, which highly affected both consumer sentiments and the purchasing power of individuals.

Commenting on the second quarter of 2006 results, Mr. Moaz Barakat - Managing Director of the World Gold Council in the Middle East, Turkey and Pakistan said:

"The rise in world gold prices had affected the demand in tonnage terms as expected along with a clear impact on gold demand because of the local stock markets in the gulf and Middle East. However, at the same time consumers are now spending more money on gold because of their belief that buying gold is among the best ways for saving as well as investment -we have seen that a lot of consumers have benefited from the world gold price rises through selling part of their gold jewellery or bars to get high profits."

Mr. Barakat added, "It has been very much noticeable the big impact of marketing efforts on gold demand. Several main gold jewellery traders in the region have maintained the level of gold jewellery sales in tonnage term (along with an increase in value terms) due to their creative marketing and focused advertising campaigns. Moreover, world gold demand for investment, especially through Gold-backed Exchange Trading Funds (ETFs) has had exceptional performance that succeeded all expectations."