Tuesday, Aug 04, 2009
DUBAI (Zawya Dow Jones)--High gold prices have led to a 70% increase in the flow of scrap gold coming onto the Abu Dhabi in recent weeks amid signs that the sheikhdom is weathering the global recession, its Gold and Jewelry Group chief said Tuesday.
"Many buyers are exchanging scrap for new pieces due to the high prices the metal rose to recently," the industry group's Tushar Patni told Dow Jones newswires.
"Inventories are rising in shops here, which is a sign that the market was badly hit," Patni said.
Abu Dhabi, one of the world's wealthiest city's due to its vast oil fields, has so far avoided a significant downturn as a result of the global financial crisis helping to keep demand for gold jewelry high.
Gold got a boost and $956.60 an ounce Monday from a weaker U.S. dollar and from increased investment risk appetite. It did pare its gains after a high of $966.50, its strongest level since June 10.
Sales of Abu Dhabi's gold jewelry fell 50% in volume in July compared to the same period a year earlier, Patni said.
"That was a setback after the rise in sales we have seen in the second quarter of 2009...I think total sales volume in this quarter will drop by about 20%," he added.
Tax-free jewelry in the United Arab Emirates lures many Gulf Arab and Western tourists.
The United Arab Emirates' capital has about 120 gold shops and its own jewelry manufacturers.
The UAE's first-quarter demand for gold fell 31% in volume to 16.6 tons, the World Gold Council (WGC) has said.
-By Summer Said, Dow Jones Newswires; +9714 364 4965; Summer.Said@dowjones.com
Copyright (c) 2009 Dow Jones & Co.
(END) Dow Jones Newswires
04-08-09 0901GMT
