UAE jewellers expect gold sales to rise by 20 per cent

Sales of gold jewellery in 2010 in Dubai and Abu Dhabi rose around 15 per cent higher than 2009, based on value, retailers say.

Consumers are becoming used to the high price of the precious metal, as investors aim to gain from its continued rise in 2011, say jewellers.

DUBAI // Gold jewellers in the UAE expect sales to grow by as much as 20 per cent in 2011, as consumers become used to the high price of the precious metal and investors aim to gain from its continued rise.

Sales of gold jewellery in 2010 in Dubai and Abu Dhabi were roughly 15 per cent higher than 2009, based on value, retailers say, but the overall tonnage of the precious metal sold was dropped due to the record-high price of gold.

Abdulwahid al Marzooqi, the secretary general of the Abu Dhabi Gold and Jewellery Group, said he had a brighter outlook for the year - as much as 20 per cent growth.

"It won't be as good as 2007 or 2008, but it will be better than 2010," he said. "Psychologically, customers are more used to the [high-price] situation."

And as the price of gold is forecasted to rise further, jewellers are hoping consumers will open their wallets to cash in.

"We are expecting appreciation in the gold price, and there is confidence in consumers to buy more gold," said Tomy Joseph, the general manager of Dubai-based jewellery store chain Joy Alukkas.

Gold jewellery is traditionally a big seller in the UAE, for adornment and investment. Investors, globally, have flocked to gold as a safe haven for their investments, which has helped to push the price of the precious metal to an all-time high of $1,431 per troy ounce in December. But the rising cost of the metal has crimped the amount of gold jewellery consumers can buy.

A somewhat stable price would be ideal for gold jewellers, but the price is expected to fluctuate and head upwards this year, said Alison Burns, the regional head of precious metals at Standard Bank's Dubai branch.

"It will continue to be challenging, because of the price," she said. "The markets are still volatile... The jewellery market has some good times coming, in terms of the Dubai Shopping Festival, which does spur appetites, but general conditions are going to continue to be challenging, because the price is so volatile. And the likely direction is going to be upwards."

RBS Coutts has pegged the long term price at $1,600 a troy ounce, it said in its latest 2011 Investment Outlook report.