January Gold Jewelry Sales Off 70% in Abu Dhabi

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"Investors buying gold bullion as a safe haven during the downturn are supporting international prices and making the metal less attractive for retail consumers. . ."

The volume of gold jewelry sales in Abu Dhabi slid 70% in January, as rising prices and the impact of the slowing global economy on consumers crimped buying, the emirate's industry group said on Sunday. A quick recovery in jewelry sales looked unlikely, said Tushar Patni, the chairman of Abu Dhabi Gold and Jewellery Group.

Investors buying gold bullion as a safe haven during the downturn are supporting international prices and making the metal less attractive for retail consumers with shrinking disposable income, Patni said. "Sales are poor, down to 70% in volume in January, it is the lowest sales since early 2008," Patni said. "The prices are high, there are no festivals or occasions and the liquidity crisis. . .these are the main reasons for such bad sales."

Some Asians, traditionally big gold buyers, have left the city after job losses and others have become more cautious due to the generally gloomy market conditions, Patni said. "Gold comes last in the shopping list and now with high prices and tight economic conditions, everyone is taking care of their pockets," said Patni.

Demand for gold bars was also down around 50%, he added. Patni saw little sign of traders offering promotions to breathe new life into the market. "It is a waste of money, nothing can help the market," he said.

Prices in January averaged around 100 dirhams ($27.20) a gram, up about 1% from December, he said.

Spot gold in London ended January at around $928.50 an ounce on Friday, up over $50 from the end of December.

Tax-free jewelry 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 jewelry manufacturers. Imports, however, make up almost 60% of all jewelry sold at retail outlets.

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