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Investment in gold increases

DUBAI — The sale of gold in the UAE is increasing year-on-year despite the high price as gold provides a security against inflation and remains one of the safest investment due to its durability apart from being an excellent risk diversifier asset, according to an industry analyst.

Some leading jewellers achieved 100 per cent sales growth during this DSF and the statistics from World Gold Council (WGC) reveals that the annual gold consumption in terms of sales experienced an increase of 25 per cent last year compared to the previous year. The retail gold sales increased to $1.4 billion last year compared to $1.2 billion in the previous year. In terms of tonnage, the UAE gold consumption increased from 88 tonnes in 2003 to 96 tonnes in 2004. This nine per cent increase in gold consumption places the UAE as one of the top 10 gold consuming countries in the world.

Karim Merchant, managing director of Pure Gold Jewellers, one of the jeweller in the UAE and an active member of the World Gold Council (WGC) told Khaleej Times, “This year’s growth is reflective of the increase in the level of trust and confidence the industry has cultivated in the general market as well as the increase in the number of tourists who came in, particularly from Europe and the Indian subcontinent. ”

Moreover, gold due to its strong resale value and exchangeability option, is a good investment for the customers, he added.

He also believes that last year, the sale of gold increased as there were many innovative advertising and market research which launched new products which were sold very fast. Apart from this, the Government of Dubai encourages the jewellers during Dubai Shopping Festival(DSF) and Dubai Summer Surprises which boosts the growth of the industry in the UAE.

DSF promotes Dubai as the City of Gold and gold sale as it brings together about 350 jewellers together under one roof and the promotional campaigns aim at strengthening the emotional bonds along with offering incentives to purchase.

Moreover, DMCC is facilitating the development and expansion of the regional precious metals market and DMCC's planned market infrastructure including free zone status, secure vault facilities will definitely strengthen Dubai's position as the regional centre for gold and precious metals.

According to Moaz Barakat, Middle East Director of the World Gold Council,

“The increase in the price of Gold does not dissuade jewellery purchasers and reports indicate that buyers are now accustomed to price in excess of $400 per ounce and that demonstrates the high afinity of consumers towards gold and gold jewellery.’’

He also believes that this significant increase in overall trade and values is due to a number of factors, including creative marketing strategies by the traders of Dubai, higher international gold prices and increase in business flows and trading with countries worldwide.

One of the leading Jeweller in Dubai told Khaleej Times, The growth would continue for the next few years as the buying attitude of consumers towards gold jewellery have evolved dramatically through the years and which has influenced market demands and the response of players in the industry.