JEDDAH: The value of Saudi Arabia’s gold sales increased by 14 percent to SR4.84 billion in the second quarter of 2008 despite the global credit crisis and inflationary pressure, the World Gold Council (WGC) said in its second quarter report.
Gold sales in value terms increased by 20 percent in the UAE and 2 percent in other Gulf countries. Egypt witnessed an astounding sales increase of 48 percent.
The surge in gold prices affected markets in the Gulf and other parts of the world. Purchases of gold jewelry and investment fell 15.5 percent to 35.9 tons in the Kingdom in the second quarter.
The high and volatile gold prices continued to dampen demand in tonnage terms during Q2, particularly for jewelry, the WGC said. While the average gold price, at $896.29 an ounce, was well below the peak of $1,011 an ounce in mid-March, it nevertheless represented a 34 percent rise on the average price of second quarter of 2007. Total demand fell 11 percent in UAE and 24 percent in other Gulf countries.
In Egypt gold demand increased 10 percent in Q2 of this year. The rise in the gold price ignited a surge of both jewelry and investment buying in Egypt in anticipation of further increase in prices.
In Saudi Arabia, the Umrah season and the internal tourism in addition to the preparations of the wedding season have influenced positively the jewelry market.
“Volatility of world gold prices accompanied with high levels as well as the increase of inflation rates in the Kingdom had the impact in decreasing the demands in tonnage terms,
Bisher Diab, Gulf region consultant and Saudi market general manager of WGC, said in the statement.
“The strength of the Saudi economy and end consumers confidence have been the main reasons in demand increase in value terms in Q2,” he said, adding that “the effectiveness of the marketing campaign in partnership with gold jewelry top traders and manufacturers helped boost the market.”
Diab is also optimistic that the gold market performance in Q3 will improve in comparison with Q3 of 2007.
The WGC has taken major initiatives in the Kingdom. “Saudi Arabia’s status in the field of gold jewelry will be more developed and enhanced with the support of WGC in cooperation with the gold jewelry committees, chambers of commerce and industry, General Commission for Tourism and Antiquities, and other public and private entities,” Diab said.
Retail investment in the Kingdom, despite the high gold price, remains well above the levels of last year.
The WGC report said India was the biggest contributor to the fall in gold demand during Q2.
Jewelry demand in the Middle East, which accounts for more than 90 percent of total offtake in the region, was down 12 percent in tonnage terms in the second quarter compared to the previous year.
The Middle East region is not experiencing the same economic concerns as other parts of the world, and this positive economic outlook should enable the recent resilience in gold demand relative to other parts of the world to continue, the WGC report said.
