Dubai: Total gold consumption in the six Gulf countries in the first quarter of 2007 stood at 66.2 tonnes, an increase of 6.1 per cent compared to 62.4 tonnes in the same quarter last year, says World Gold Council (WGC) official.

Gold consumption in terms of tonnage in the UAE stood at 29.7 in the first quarter of 2007, an increase of 5.7 per cent compared to 28.1 in the first quarter of 2006.

Consumption in Saudi Arabia stood at 26, an increase of seven per cent compared to 24.3 in 2006.

Other Gulf countries combined together stood at 10.5 tonnes, an increase of five per cent compared to 10 tonnes during the same period last year.

Average gold prices during the quarter stood at $650 per ounce. Global consumption during the first quarter stood at 500.2 tonnes, an increase of 5.8 per cent compared to 472.9 tonnes in 2006.

Commenting on strong results, Moaz Barakat, Managing Director of the World Gold Council in the Middle East, Turkey and Pakistan said: "The positive effect of the marketing and promotional campaigns held by the World Gold Council and its partners from gold traders in several countries of the region have been very much apparent on gold jewellery demand."

Buying opportunity

In the UAE, the quarter started well with excellent offtake from the highly successful Dubai Shopping Festival. The festival witnessed record sales by participating jewellers that were 25 per cent higher than the successful festival held two years ago.

During the rest of the first quarter, the vibrant UAE economy and strong tourist growth continued to boost demand and consumers, as in other price sensitive markets, are becoming used to higher gold prices and expecting them to rise further.

"'Consumers are also now accustomed to high gold prices and a growing consensus that the price of gold could rise further. The small retreats in the gold prices from time to time were seen as a strong buying opportunity," says Barakat.

Barakat says the outlook for the second quarter is very positive with good jewellery demand in most of the key markets. As consumers are accustomed to higher prices, the gold pricing levels have become less of a deterrent.

According to analysts, gold prices are expected to touch $700 an ounce by third quarter.

Price dips have become a good buying opportunity. Demand per head in Saudi Arabia and the Gulf region is already high compared to other countries while competition, both from other forms of jewellery and lifestyle products, is increasing.

Currencies in Saudi Arabia and the Gulf countries are tied to the US dollar so these countries saw the full impact of the rise in dollar prices against gold.

He says in March, gold prices rose to $690 an ounce but in April and May, the prices fell by $15 and stood at $660 an ounce level.

According to major bullion banks in UAE, the second quarter is expected to be strong due to exceptional demand from India. We expect another 10 per cent increase in second quarter sales.

Dubai imports about 500 tonnes annually and of that 100 tonnes stay in the emirate and the rest is re-exported to other countries (Saudi Arabia, Iraq, Egypt and India). In the first quarter of 2007, the UAE imported 132 tonnes, an increase of 17 tonnes or 14.8 per cent compared to 115 tonnes in first quarter of 2006.

UAE gold demand fell about 10 per cent in volume terms in 2006, according to the WGC.

Dubai reports 32% jump in April sales

Dubai gold sales rose 32 per cent in value in April from the same month a year earlier as prices stabilised, a top Dubai Gold and Jewellery Group (DGJG) official said yesterday, without giving a figure for the change in volume.

"April was a very positive month. Gold sales were up 32 per cent compared with the same period last year as more customers upped their purchases after prices stabilised," said Tawhid Abdullah, managing director of the Gold and Jewellery Group.

"The Dubai gold market is more and more positioning itself as the centre of the Middle East."

Abu Dhabi gold sales rose about 10 per cent in volume in April from the same month the year before, while sales value jumped 17 per cent during the same period.

Abdullah said second-quarter sales could see an increase of about 30 per cent in value.

Abdullah said the market in Dubai had not been affected by the price movement and there was still an appetite for the precious metal.

The value of gold sales in the Arab region is expected to grow by 15 to 20 per cent a year as economies expand and tourism grows, the chairman of the Gold and Jewellery Group has said.

Dubai is one of the world's top gold consuming centres and a major hub of the physical gold trade in the Middle East and Asia.

The value of gold sales in the Gulf Arab region is expected to grow by 15 to 20 per cent a year as econ-omies expand and tourism grows, the chairman of the Gold and Jewellery Group has said.

The region's economies grew about seven per cent in 2006, driven by high oil prices, increasing the appetite for jewellery.

With input from Reuters