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UAE gold offtake surges 11.6pc in second quarter

DUBAI - Driven by a remarkable demand surge in Saudi Arabia, the UAE and Turkey, Middle East gold offtake in the second quarter rose some eight per cent to 98.5 tonnes from 91.2 tonnes year-on-year.

While the yellow metal offtake in the UAE in the second quarter (Q203) increased by 11.6 per cent to 26.4 tonnes from 23.7 tonnes in the same 2002 period, Saudi Arabia outpaced the Emirates with a 14.5 per cent growth at 40.5 tonnes from 35.3 tonnes in the same period last year.

According to Monisha Macleod, marketing manager of the Dubai-based World Gold Council, the latest statistics of Gold Fields Mineral Services demonstrates that a Gulfwide boom in jewellery demand continues apace despite the soaring price.

The Q203 surge indicates that UAE's total gold offtake, which dropped from 99.6 tonnes in 2001 to 93.1 tonnes in 2002, would record an overall growth this year. In the first quarter, UAE's gold demand dropped some three per cent to 27.5 tonnes from 28.4 tonnes in the same 2002 period, mostly on a sluggish fabrication demand.

In the second quarter, UAE's jewellery demand, which constituted some 24.2 tonnes, recorded a 6.8 per cent growth while the net retail investment, accounting for some 2.2 tonnes surged 120 per cent. In Saudi Arabia too, jewellery demand at 38.3 tonnes, surged by 10.9 per cent while net retail investment at 2.2 tonnes rose by 161.9 per cent. While demand in Egypt showed negative growth at 9.8 per cent - from 18 tonnes to 16.5 tonnes, Turkey's offtake recorded a phenomenal surge of 79 per cent to 49.6 tonnes in the second quarter. Overall jewellery demand in the Middle East rose some 4.1 per cent to 92.6 tonnes.

In all the AGCC countries, this upswing in jewellery sales was particularly strong. According to M.M. Ramachandran, managing director of Atlas Jewellery Group, which has jewellery outlets in all the six countries, a remarkable sales surge was discernible in Kuwait and Saudi Arabia in the wake of the war. In the UAE, sales growth in Abu Dhabi and Sharjah during this period was at a record 50 per cent compared to the same period last year. Dubai posted an impressive 34 per cent growth while Oman recorded some 50 per cent increase. Qatar and Bahrain registered a sales increase of 40 per cent and 30 per cent respectively.

Worldwide, gold demand staged a revival by posting a 6.6 per cent growth - from 653.1 tonnes to 696 tonnes per cent year-on-year in the second quarter after a first quarter plunge to 641 tonnes from 715 tonnes in the same 2002 period. Global jewellery demand rose 5.8 per cent to 626.1 in Q2 this year compared to 591.7 tonnes in the same period last year. The total global gold demand in 2002 was 3020.6 tonnes and jewellery demand 2,688.6 tonnes.

The greatest change in the second quarter, according to the WGC executive, was in producer de-hedging which provisional estimates show rising very strongly to record levels. Jewellery fabrication managed a small gain, largely thanks to India, though other forms of fabrication demand rose. In contrast, bar hoarding fell notably. According GFMS statistics, on the supply side, mine production rose slightly, though this was largely a result of unusually low figures for Indonesia in 2002. Much larger year- on-year growth was seen for old scrap, with large volumes emerging from countries such as Egypt and Saudi Arabia. Official sector sales, however, eased a fraction. Supply also received a small contribution from the switch to modest levels of implied net disinvestments. This left total supply just over five per cent higher than in Q2 last year.

Worldwide, the first quarter's year-on-year fall in jewellery fabrication was sharply reversed in the second, chiefly as a result of lower and more stable gold prices. This was most apparent in India though much of south east Asia (Indonesia or Thailand) and many countries in the Middle East (such as Turkey or Saudi Arabia) also registered solid growth.