"There were many people going on holiday and buying
gifts for the family and friends, and with a lot of Christmas and New Year
offers there was slightly better demand compared to last year," said a
retailer in Dubai's old gold souk.
Gold prices rose to record highs last year as investors
worried about the outlook for the euro.
Last week the metal posted its biggest weekly loss since
mid-2010, but is clawing back some lost ground. On Wednesday it rose further
above $1,380 an ounce in Europe on a softer dollar, rising oil prices and firm
physical interest from Asia.
"People are starting to look at gold as a good
investment again, we are seeing more buying despite prices being high,"
another Dubai gold souk retailer said.
On the investment front, more demand is seen in the
physical gold bar market from individual investors, said Pradeep Unni, senior
analyst and trader at Richcomm Global Services in Dubai.
"Investors are buying more these days because they
expect to make good returns this year, we are seeing strong demand in the
physical market," he said.
Ten Tola gold bars, known as TT bars, which weigh around
116.6 grams and cost around $5,000 are becoming a popular choice for investors,
Unni added.
"TT bars are more affordable than, say, the one kg
bars, so we have seen a lot of demand for them in Dubai."
Overall, tonnage demand in the Middle East fell 11
percent in the third quarter last year to 60.4 tons from 68.0 tons in the same
period a year earlier, according to the latest World Gold Council report.
Demand in Egypt and the UAE dropped by 8 and 9 percent
respectively. While Saudi Arabia and the other Gulf states witnessed a drop of
10 percent year-on-year, it added.
