|Various baubles make up for falling gold sales in Dubai
|Sales for Dubai's gold industry dropped 30 percent in the first half of the year as gold prices soared, the chairman of a gold and jewelry trade group in the UAE emirate says.
Although customers shunned gold, sales of diamonds and precious stones surged 40 percent, keeping jewelry sales growth in positive territory, Tawhid Abdullah of the Dubai Gold and Jewelry Group told the Reuters news agency in an interview this week.
Gold prices extended their rally in the first half of this year, rising above $700 an ounce in May to hit a 25-year high.
"We are down about 30 percent in gold [sales] this year. I think the rise in gold prices was the main reason," Abdullah said, adding that domestic demand had been hurt by the rising cost of living in Dubai, commercial hub of the UAE.
Abdullah said the value of gold sold by Dubai's merchants totaled about $570 million in the first six months of the year, with jewelry sales reaching $1.4 billion.
"Together, the overall market grew about 3 percent so far but we are used to 10 to 15 percent growth every year," he said.
"At the end of the day we are not in a down-trend market," he added, "but we are spoiled by high growth."
In 2005 the UAE's consumption of jewelry and investments in gold rose 21 percent in value terms to $1.7 billion.
Gulf Arab visitors and Westerners have poured into the UAE to shop for discounted, tax-free luxury goods in Dubai's huge shopping malls and the labyrinthine Gold Souk.
A survey published earlier this month showed that the 6 million tourists who visit Dubai each year accounted for 52 per cent of retail jewelry sales.
Dubai has its own jewelry manufacturers, but imports made up 58 per cent of all jewelry sold at retail outlets, while exports account for 47 per cent of total wholesale volume.
Abdullah said the Gulf Arab region was Dubai's biggest market, accounting for about 35 per cent of total gold and jewelry exports, with Africa second, followed by Europe, the US and the Subcontinent.
He said gold sales had fallen by about 40 per cent in Europe because of high prices but demand had not changed significantly in Asia, where buying is driven largely by tradition and is less prone to price swings.
Abdullah said that approximately 20 percent of Dubai's total jewelry imports came from Italy, with India second and Malaysia third.
Imports from Italy are valued at about $700 million per year and last year the UAE was second only to the United States as a market for the high-fashion Italian jewelry.
"This year I think we could overtake them [the United States]," Abdullah predicted. "I think we are behind by a very small percentage."
The Daily Star