Multi-year high prices weighed on Abu Dhabi's gold sales in 2007, depressing them by 25 percent in volume and 30 percent in value, the Gulf Arab emirate's Gold and Jewellery Group chief said on Saturday. "The high prices we saw last year kept many buyers away, but these figures are not too bad compared to what is happening globally in the gold market," Tushar Patni told Reuters.
"In the fourth quarter of last year, gold sales value dropped by 25 percent, and the volume by about 20 percent, which had a negative effect on the overall performance of the market, which was quite healthy earlier in the year," he said in a telephone interview. Spot gold surged to a record just shy of $900 an ounce on Friday as investors poured into the market, driven by uncertainties in financial markets and inflation fears amid signals that aggressive US interest rate cuts may be on the cards.
The precious metal gained more than 30 percent in 2007 as safe-haven buying increased due to credit market turmoil and worries about the health of the US economy that sent the dollar to record lows, and record high oil prices.
"The holiday season, like the (Muslim) feast of Eidul-Azha and Christmas, stopped sales from dropping further, because people had to buy gifts despite the new price levels," Tushar said.
"December's gold sales were down by 10 percent in volume and 15 percent in value, which is also a sign that customers are adjusting to these price levels." Tax-free jewellery in the United Arab Emirates' gold souks and shopping malls draws Gulf Arab and Western tourists.
Some local traders feared gold sales volume in the UAE, a seven-member federation that includes Dubai and Abu Dhabi, could fall by about 10 percent in 2007, as they did in the previous year due to high prices. But the World Gold Council said on Monday last year's demand increased by almost 12 percent in volume and 20 percent in value from the year before as tourism grew.
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