Aram Shishmanian, CEO of the WGC, said Saudi Arabia had been, and continued to be, an important market in the region. The Kingdom's consumer gold demand, which grew 35 percent in the first quarter of 2010, represents a third of total gold demand in the Middle East, which was 65.8 tons.

In recognition of the importance of the market, he added, the WGC is keen to identify new ways and initiatives to work closely with local gold dealers as partners to stimulate and sustain the demand for gold.

Shishmanian, joined by Ajay Mitra, managing director of the Middle East, India and Turkey, and Saudi Arabia Country Manager Bisher Diab, met local senior gold traders in Riyadh and Jeddah and visited Riyadh and Jeddah Chambers of Commerce & Industry to discuss the critical challenges facing the Kingdom's gold industry.

"Saudi Arabia (93 tons) is the world's fourth largest gold consumer market in the world after India (480 tons), China (460 tons) and the United States (260 tons)," Shishmanian said, adding the per capita consumption in Saudi Arabia is the highest in the world due to its family-linked traditions.

He said the WGC was preparing to create the Jeddah Goldsmith Institute in cooperation with Jeddah Gate of Gold Company, headed by Jamil Farsi, chief of Jeddah's jewelers.

He said the WGC was trying to tap new consumer segments such as the youth market in Saudi Arabia.

"With a view to develop Saudi expertise in the gold market, the launch of the Jeddah Goldsmith Institute is planned for Q4 this year where intensive six-month training courses for young Saudi nationals will be given with guaranteed employment upon graduation from the course," Shishmanian added.

He said women also could be recruited in the gold retailing industry in the Kingdom.

The WGC is working to organize seminars in Riyadh and Jeddah with the gold and jewelry committees and co-launching of new website - the Jeddah Gate of Gold. In addition, the WGC is co-delivering a wedding campaign with L'Azurde, as well as launching a new fine and fashionable gold jewelry brand, which will be marketed in Q4 of this year addressing the needs of the young consumers in the Kingdom. Shishmanian said their estimates showed about 55 percent of gold was purchased for weddings in Saudi Arabia.

He said gold trade in Saudi Arabia must seek to innovate and develop new products in addition to bringing innovation to product display and visual merchandising.

When asked about the recent all-time high gold price and the WGC's role in it, Shishmanian emphatically stated: "The WGC does not control gold price. The gold price is determined by the market and is driven by the dynamics of supply and demand."

He, however, added that the gold price had been building steadily for nine consecutive years. The current trading range, about $1,200 per ounce, has been a measured rise, supported by a combination of favorable gold fundamentals, which remain strong.

He said there was a robust demand in the context of constrained supply and there was a structural shift in central bank reserve management from net suppliers to buyers, as Western central banks showed gold sales and developing nations added to their gold reserves.

Last month, the WGC released a report highlighting the recent revision of Saudi Arabian Monetary Agency's (SAMA's) gold holding from previously estimated 144.3 tons to 322.9 tons.

"The last decade has seen two periods of massive wealth destruction. As a result, the emphasis has shifted away from wealth accumulation and toward wealth preservation," he added.

Gold has played a crucial role in underpinning wealth over the past two years. Even a small allocation of gold has been proven to make portfolios more robust and reduce the variability of returns.

"Gold will continue to play a crucial role in the coming period, not only due to the shift toward wealth preservation, but also because investors with gold in their portfolio will be more comfortable with a return to riskier assets," Shishmanian said.

He added the WGC is constantly looking for new products and channels to make gold more accessible to investors throughout the world, such as ETFs (exchange traded funds), making them relevant to local markets.

Gold is a unique investment, allowing portfolio diversification and optimal wealth preservation. This makes it a useful instrument as part of an investment strategy.

The DGS (Dubai Gold Securities) was the first ETF to be launched in the Middle East. Dubai Gold Securities offers investors an innovative, cost efficient and secure way to access the gold market. Listed on NASDAQ Dubai in 2009, Dubai Gold Securities is the first physically backed gold product to be listed on the exchange and in the Middle East.

The WGC sponsors a number of gold-backed ETFs worldwide, including DGS, accounting for about 85 percent of the market. ETFs are listed and traded like equities, giving investors exposure to the gold market without taking physical delivery. Sponsors buy gold and store it.

Shishmanian said Dubai remained an important gold market not only in the Middle East but also globally. "Dubai benefits from strong trade from tourists and it has a significant Indian expatriate population. Gold plays an important role in Indian culture," he added.

In the Middle East there is definitely a lot of room for growth in the gold investment market, Shishmanian said. The jewelry industry in the Middle East remains strong with 59.5 tons being sold in the first quarter of this year, a 22.7 percent increase from the same period of 2009.

The WGC will be focusing its efforts on developing new products and initiatives, especially targeting the premier market and younger segments, he added.

He said the demand for gold would continue to surge globally as the usage of gold had increased substantially not only in jewelry format but other purposes also. He said demand would continue to go up in India and China as well as in Brazil.

Mitra said: "Through working with our local partners, Diab and his dedicated team have already achieved significant successes in both Saudi Arabia and the region. This visit by our CEO further demonstrates our continued commitment to helping grow the gold market in Saudi Arabia."