DUBAI (Reuters) – Gold sales in the Middle East jumped in 2007 as strong regional economies stoked demand for the precious metal but high and volatile prices dented demand in the fourth quarter, the World Gold Council (WGC) said on Saturday.
The precious metal rose more than 30 percent in 2007 amid safe-haven buying due to credit market turmoil and worries about the health of the U.S. economy, which sent the dollar to record lows, as well as record high oil prices.
Spot gold hit a record high of $936.50 an ounce at the beginning of February.
“Comparing the Middle East performance to the rest of the region…the high and volatile gold prices did not affect the gold market to the extreme as per the other regions,” Moaz Barakat, managing director of the WGC in the Middle East, Turkey and Pakistan, said in a statement.
Gold demand in Saudi Arabia rose 15.2 percent to 120.2 tonnes in 2007, while sales value surged 33.3 percent to $3.2 billion.
While demand fell 8.9 percent to 22.4 tonnes in the fourth quarter from the same period a year earlier due to price volatility, it rose 4.9 percent in value to $599 million.
“Despite the shortfall in tonnage in the recent months; the total annual figures reflects a positive outlook,” Barakat said.”
Earlier this year the Middle East’s largest gold consumer virtually stopped exporting scrap gold as jewellers take advantage of record-high prices.
Demand in the United Arab Emirates followed a similar pattern to Saudi Arabia. Full-year 2007 gold demand rose 8 percent to 99.8 tonnes, but it fell 8.1 percent to 19.3 tonnes in the fourth quarter.
Value of gold sales in the seven-member federation that includes Dubai rose 23.8 percent to $2.6 billion in 2007. Fourth-quarter sales value reached $516 million, almost 6 percent increase from the same period a year earlier.
Dubai is a long-established market for gold bullion and wholesale and retail jewellery, where the trade is fuelled by strong demand from the Arab world and India, the world’s top gold market.
Gulf Arab and Western tourists visit the UAE to shop for discounted, tax-free luxury goods in huge shopping malls and the gold souk.
Last year’s demand in Egypt, the most populous Arab country, was up 12.2 percent at 67.3 tonnes, while sales value rose 28.6 percent to $1.8 billion, boosted by growing tourism and a stronger economy, the WGC said.
The country’s fourth-quarter demand was up 8.8 percent at 17.4 tonnes valued at $465 million, as the economy expanded and more regional players jumped into the jewellery market.
Egypt, which once considered gold the skin of the gods, is revisiting ancient deposits of the metal — some of which have not been worked for 2000 years. It produced a sample gold bullion bar in April but has not produced gold commercially in 50 years.