Gold jewellery demand in the UAE fell by 14 per cent in the first quarter as a 17 per cent gold price rally dampened appetite for the precious metal.
Demand fell to 14 tonnes in the three months to March 31, from 16.3 tonnes a year earlier, the World Gold Council, the London-based market development body, said in a report.
“The sharp rise in the price of gold during the first quarter of the year was a deterrent to jewellery demand, particularly in the price-sensitive markets of Asia and the Middle East, where consumers prefer to buy when prices are less volatile,” said the report.
The region was also “beset as they were by a mix of ongoing geopolitical issues, low oil prices and weak tourism revenues”, it said. Demand across the Middle East fell by 10 per cent in the first quarter. Egypt was the worst performer with a 18 per cent drop, followed by Kuwait at 15 per cent. Demand in Saudi Arabia dipped by 12 per cent.
Demand in Iran rose by 10 per cent on the back of lifting of decades-old sanctions in January.
The council’s data for the UAE contrasts with the Dubai Gold and Jewellery Group’s figures, whose managing director said gold jewellery demand so far this year is up close to 5 per cent.
“I think people when they saw gold prices go up from US$1,100 [an ounce] to $1,270 they were more encouraged to buy gold,” said Mr Abdullah.
Gold prices have surged this year thanks to wobbly economic growth, and a low interest rate environment. Gold prices tend to fall when interest rates rise because the precious metal bears no interest. A strong dollar also makes the dollar-denominated commodity expensive for buyers in other currencies.
The gold rally comes after prices fell last year for the third year in a row, shedding 11 per cent as the US increased its interest rates in December for the first time in a decade and the dollar rallied against other currencies.
Globally, gold demand soared by 21 per cent, the best first quarter on record thanks to inflows into gold exchange traded funds (ETFs). Investments in ETFs were the highest since the first quarter of 2009 as sentiment towards the metal rose.
ETFs are funds that are listed on stock exchanges, tracking indexes and behaving like stocks.
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