Gold sales in Dubai tipped to rise as saving product in economic volatility

Gold jewellery sales in Dubai are forecast to rise by about 5 per cent this year as consumers buy the metal as a savings product amid economic instability, the chairman of the Dubai Gold & Jewellery Group said yesterday.

Dubai’s gold sales, which grew about 5 per cent to about Dh14 billion last year from a year earlier, had a good start in 2016 during the shopping festival in January, Tawhid Abdullah said at the Global Commodity Outlook Conference.

“The rally in the gold price is giving more confidence to the consumer and I see people buying more jewellery,” said Mr Abdullah. “ There is a shift from diamond jewellery products to gold products.”

On Friday, gold prices ended up 1 per cent at US$1,159 an ounce. It has risen about 10 per cent for the year to date on the back of expectations that the US Federal Reserve will slow down interest rate increases amid the volatility.

Gold prices fell last year for the third year in a row, shedding 11 per cent as the US increased its interest rates in December for the first time in a decade and the dollar rallied against other currencies.

Gold prices tend to fall when interest rates rise because the precious metal bears no interest. A strong dollar also makes the dollar-denominated gold expensive for buyers in other currencies.

In Dubai, about 50 per cent of gold jewellery is bought by the Asian community, 25 per cent by Arabs and the remainder by tourists, said Mr Abdullah.

“We have good tourists, we have GCC visitors and the Asian community continues to grow,” said Mr Tawhid. “If anything, savings will increase this year.”

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