Layoffs Knock Dubai Gold Market
Source: Reuters (1/25/10)
"Laid-off S. Asian workers returning home have robbed the Dubai retail gold market of some of its keenest buyers"
"Thousands of jobs were lost and that directly had an impact on the volume of gold sales in Dubai," Vasant Mehta, chairman of the Gem & Jewellery Export Promotion Council based in Mumbai said in an interview.
Jewelry sales in Dubai, dubbed the city of gold, have continuously declined since the end of 2008, as disposable incomes have fallen due to the global downturn.
The sales slide continued last year as gold hit a record high of $1,226.10/oz. on Dec. 3, taking the precious metal further out of reach for cash-strapped consumers.
Spot gold prices reached around $1,093.65/oz. on Monday; however Mehta expects prices to dip below the $1,000 mark only if India and China's central banks decide not to buy more reserves.
"Four months ago India's central bank bought 200 tonnes of gold, which hyped up prices and now there are rumors of another 200 tonnes order in addition to China wanting to buy more reserves," Mehta said.
Despite a slow six months of sales following the economic crisis, India's retail gold sale volumes grew by 2% in 2009 compared to a year earlier, said Mehta.
This year jewelry sales in India were expected to grow by 4%–5%, said Mehta.
"Like the Middle East, gold in India is part of our tradition and there isn't a year that goes by without at least the purchase of one item—that's why this sector will remain vibrant."