Saudi second quarter gold demand up 17 percent

Saudi Arabia gold sales rose almost 17 percent in volume and 25 percent in value in the second quarter of 2007, a senior World Gold Council official said on Saturday.
"The euphoria of selling gold to invest in stocks cooled off and the region saw a very healthy revival this year," said Moaz Barakat, managing director of the WGC in the Middle East, Turkey and Pakistan.
"In the first half of the year, the gold market in Saudi Arabia saw an increase of 18 percent in volume and 30 percent in value according to our primary estimates," he told Reuters in an interview. Four of the seven Gulf Arab stock benchmarks dropped more than 35 percent in 2006, resulting in a capitalisation loss of about $500 billion since February, and analysts say much capital has left the bourses for other asset classes.
Second-quarter gold demand in the United Arab Emirates increased by almost 14 percent, while sales value rose 25 percent. Total tonnage demand in the first half of 2007 was up by almost 24 percent, while sales value saw an increase of 27 percent during the same period, Barakat said.
Demand in the UAE, a seven-member federation that includes Dubai and Abu Dhabi, fell 9.9 percent in volume terms in 2006, the WGC has said. Local traders have said gold sales in the UAE could fall by about 10 percent in volume for the second consecutive year in 2007 due to price volatility.
In Egypt, the most populous Arab country, both second-quarter and half-year gold sales were up 15 percent in volume, and 30 percent in value as regional players continue to revive the market, Barakat added.
Saudi Arabia's gold demand fell 16.4 percent to 128.1 tonnes in 2006 due to price volatility in the first half of the year, but demand rose 14.7 percent in the fourth quarter of 2006 from the same period in 2005, the WGC said in a report in February.
The recovery of the regional gold market and high prices led to a shortage of scrap gold in Saudi Arabia and Egypt in recent months, Barakat said. Spot gold bullion peaked at $730 an ounce in May 2006 - its highest since a record peak above $800 in 1980. "These two markets almost had no scrap in the first half of the y April. The region's economies grew about seven percent in 2006 as high oil prices fuel rapid expansion, bringing with it increasing appetite for jewellery.