SHARJAH, 2 June 2005 — Gold consumption in Saudi Arabia grew by 10 percent to 37.3 tons in the first three months of 2005 when compared with the corresponding period in 2004. In terms of sales during the same period, the growth rate was 15 percent, from $509 million in 2004 to $586 million in 2005.
A statement issued by the Dubai office of the World Gold Council showed that Saudi Arabia led the list of consumers in a grouping made up of the six GCC countries and Egypt.
The total consumption of gold by the GCC states during the first three months of this year was 104.1 tons - Saudi Arabia with 37.3 tons, followed by the UAE with 32 tons (a growth of 10 percent), Egypt with 21.3 tons (a growth of six percent) and other Gulf countries accounting for the rest (a growth of one percent).
The total sales of gold by the grouping amounted to $1.636 billion - Saudi Arabia with $586 million, followed by the UAE with $503 million, Egypt with $335 million and other Gulf countries accounting for the rest (a growth of six percent). “The first quarter of 2005 witnessed an exceptionally strong demand for gold, particularly from the jeweler sector, bars and coins purchases and from investment in gold,” said the WGC statement. In the UAE, the retail investment in bullion coins and bars increased by 10 percent from two tons in 2004 to 2.2 tons in 2005.
According to the World Gold Council, several factors explain the strength of demand seen in the first quarter of 2005 including increased and successful jewelry promotions, introduction of new investment products in the market, and an undercurrent of political and economic unease favoring gold investment. “These factors alone would have supported a continuation of last year’s buoyant trends,” it said.
With consumers now accustomed to gold prices over $400 per ounce, and a growing consensus that the price of gold could rise further, the small retreat in the gold price from the peaks seen in last quarter of 2004 was seen as a strong buying opportunity, said the council Moaz Barakat, the council’s managing director for the Middle East, Turkey and Pakistan, said: “Many factors have led to the improved performance in the first quarter of 2005. Gold off take during the Dubai Shopping festival rose 30 per cent and that was a result of the doubled promotional spending on gold compared to the spending in 2004. “This remarkable performance is also a result of promotional activities initiated by the Gold and Jeweler Group in addition to the existence of the active jeweler trade. The increasing boom in the tourism sector is also continuously improving the gold market.” Despite any situations around the globe, the gold market remains healthy and stable in the Gulf region, the council pointed out citing the 15 percent growth in sales in Saudi Arabia.