DUBAI // Gold may have experienced its worst month in a quarter of a century, but this has not dampened retailer confidence in predicting continuing strong sales. Bullion fell 17 per cent last month, its biggest percentage decline since February 1983 when it finished the month down 18.2 per cent. The price of gold is now down 12 per cent this year, well below the record high of US$1,030.80 an ounce struck in March. However, dropping prices have sparked a jump in sales. Also, fears of a global recession are driving investors into less volatile assets, with gold, silver and precious stones standing out as appealing alternatives. "What we ended up seeing here in Dubai was a sort of gold rush with some of the retailers reporting 300 and 400 per cent increases in sales in just the past few weeks," said Swapna Nair, the general manager of the Dubai Gold and Jewellery Group. The third quarter is traditionally the high season for the region's gold and jewellery industry as it is a popular time for weddings. This year, however, it also coincided with Ramadan and the Indian festivals of Dhanteras and Diwali. Industry insiders say they expect the World Gold Council's third-quarter report, due out in the coming days, to yield exceptional results. "I think the third quarter will hold steadily," said Ms Nair, citing the recent average price of Dh82 and Dh83 per gram as a catalyst for buyers. "Sales were so high during Dhanteras that there were concerns by the first day of Diwali that there might be shortages, but so far most retailers are coping with the high sales." Gold hit a 13-month low of $680.80 last week after many investors sold the precious metal to pay for margin calls. Retailers said the lower prices may lure first-time investors at a time when other assets become increasingly risky. US gold futures for December delivery fell 2.8 per cent on Friday to $718.20 an ounce on the COMEX division of the New York Mercantile Exchange. High and volatile gold prices during the second quarter of this year dampened demand across the region while driving sales revenues up, according to data released by the World Gold Council. The UAE and Saudi Arabia experienced an 11 and 15 per cent drop in sold and invested quantities respectively, while experiencing a significant increase in sales revenues on higher prices. The UAE enjoyed a 20 per cent boost in revenues, the largest increase in the GCC, bringing the sales value to Dh3.6 billion, up from Dh3bn in the same period last year. Similarly, sales in Saudi Arabia rose 14 per cent, and across the rest of the Gulf by 2 per cent. However, despite the confidence exuded by the regional industry, some are urging vigilance on the back of the global financial crisis. "Gold, silver and precious stones have value and are a counterpart of solid money, and I hope people recognise that," said Gaetano Cavalieri, the president of the World Jewellery Confederation. "But this industry is not out of this world, so obviously the financial crisis will have some impact on the jewellery business." vsalama@thenational.ae
