High prices and the economic downturn have battered Abu Dhabi's gold market, cutting retail sales by over 70 percent on the year in February, the Gulf emirate's gold and jewellery group chairman said on Sunday. Investors have used gold as a shelter from the impact of the deteriorating economy on other assets, pushing the price up and making jewellery expensive for consumers with shrinking disposable income.
"It is going from bad to worse. It has not picked up," Tushar Patni told Reuters. "The price is still high. Buyers are staying away and the gloom in the market continues." Retail sales in Abu Dhabi dropped at least 70 percent in February, a little more than the 70 percent fall in January, he said. Sales will improve if gold prices come down but given the economic climate, it may take several months more, he said. "Even credit is not available easily and that is making things difficult for traders," Patni said.
Spot gold traded about $1,000 an ounce in February for the first time in nearly a year. It has since fallen to just under $940. Tax-free jewellery in the United Arab Emirates' gold souks and shopping malls draws Gulf Arab, Asian and Western tourists. Abu Dhabi has some 85 gold shops and its own jewellery manufacturers. Imports make up almost 60 percent of all jewellery sold at retail outlets.