Ahmed al Mansoori, a police officer from Abu Dhabi, sighed with exasperation at the price a jeweller was offering for his mother's gold necklace yesterday at Madinat Zayed Gold Souk in Abu Dhabi. But he decided to sell anyway. "I expect prices to go down, because world demand on gold has weakened," Mr al Mansoori said.
Many others seem to share his view. In recent days, customers at the souq have been aggressively unloading their pieces of the precious metal, jewellers said this week. It is a smart move, said Pradeep Unni, an analyst with the commodities firm Richcomm Global Services, based in Dubai. Mr Unni said gold was "certainly shifting into a selling tone" after calls from Barack Obama, the US president, for tighter bank regulation.
Gold closed at $1,093.55 in Singapore yesterday. Since the yellow metal reached its record high of 1,217.40 on December 3, it has dropped more than 10 per cent. It fell 3 per cent last week alone. Mr Obama's pledge to reform banks, which could affect the types of deals they can enter into, sparked concerns among analysts that it would reduce investment demand for commodities such as gold. The regulations could "force investors to liquidate their gold positions, thereby dragging the metal down", Mr Unni said, adding that the dollar appeared to be gaining momentum. Gold prices typically rise when the dollar is weak, and vice versa.
At the Madinat Zayed Gold Souk, jewellers reported brisk business yesterday, even as prices continued to slide. "Perhaps they were afraid it would go down further. I guess they wanted to take advantage," said Riyad Musbah, of Riyad Jewellery. Mr Musbah said he had a 15 per cent increase in traffic last week, leading to a 10 per cent rise in profits, "from just buying gold scraps". @Email:firstname.lastname@example.org