Middle East gold sales seen sparkling despite high price

Record gold prices will not dent demand for jewellery in the booming Middle East, but retailers face stiff competition from luxury goods, industry experts said on Tuesday.
Gold jewellery once reigned supreme in the region as the gift of choice at celebrations such as weddings and birthdays. Women also regarded gold as a form of financial security.
But industry experts said retailers could no longer afford to take this demand for granted as technology consumables, designer goods and even holidays are proving more attractive to today's wealthier Middle Eastern customers.
"Fifteen years ago, a lady would have thought a necklace was a necessary accessory to her evening gown, but now she can choose from an iPod (music player), or a perfume or even forget about the whole party and go away for the weekend," said Gaetano Cavalieri, president of global jewellery confederation CIBJO.
"The jewellery market has tremendous growth potential, especially in the Arab Gulf where economies are buoyant due to high oil prices, but we need to be market savvy," he told a gold and jewellery conference in Dubai, a major Gulf Arab trading hub for the precious metal.
Record oil prices have sparked an economic boom in the world's top crude exporting region, feeding into Gulf Arab real estate and stock markets.
Gulf markets are seen as particularly lucrative for luxury and technological goods such as designer handbags and mobile phones since residents in the region like to keep up with global trends, often regardless of the cost.
Moaz Barakat, Middle East director for the World Gold Council (WGC), said the high gold price would actually boost jewellery sales since it would give customers confidence.
According to WGC figures, total gold consumption in the region was 251 tonnes last year, with the lion's share going to Saudi Arabia and the United Arab Emirates. Gold has recently been trading at 25-year highs.
"A steady increase in price like what we are seeing is good for both the retailers and the people who are buying gold because they know their purchase will retain its value," he told Reuters on the sidelines of the conference.
"We're expecting at least 10 percent growth in jewellery sales in the region this year, and the biggest challenge is not the price, it is the competition from other goods."
Barakat said marketing was key for boosting sales, adding that gold accounted for a paltry 0.1 percent of advertising spending in the region, compared to 11 percent for luxury goods.