Gold Demand Surges 30% in Saudi Arabia 

(MENAFN - Arab News) JEDDAH, 20 August 2007 — Strong economies and stable prices in the Middle East region (Saudi Arabia, UAE, Kuwait, Bahrain, Oman, Qatar & Egypt) increased gold demand by 20 percent to 97.5 tons in the second quarter of this year, the World Gold Council (WGC) report released on Wednesday said.

In Saudi Arabia, Umrah pilgrims and tourists pushed up gold demand by 30 percent in the second quarter of this year compared to same period in 2006.

The demand was further boosted by a decision at the end of March to reduce duty on imported jewelry from 12 percent to 5 percent, and an ongoing promotional campaign "Miss L'Azurde" by L'Azurde in partnership with WGC.

The impact of the wedding season and the combination of all these elements would continue the bullish trend in the third quarter, WGC forecast, noting that the stock market euphoria is no longer diverting the attention of traders and consumers as it did prior to last year's crash.

The total gold demand in Saudi Arabia in the second quarter was 42.5 tons, the report said.

Gold demand in UAE was 15 percent higher compared to last year, with jewelry demand rising 18 percent. Total gold demand in UAE in second quarter reached 29.8 tons.

The report said demand in Kuwait, Bahrain, Oman and Qatar totaled 12 tons — an increase of 15 percent year-on-year.

In Egypt, consumer demand was 9 percent higher as compared to year earlier while jewelry demand increased 8 percent. The country's demand reached 13.3 tons.

Demand in Turkey was very strong in the second quarter, notably in May and June, with jewelry raking in 52.2 tons and net retail consumption taking 20.5 tons, an increase of 14 percent and 5 percent, respectively, against the previous quarter. The country's gold demand reached 72.8 tons in the first quarter of 2007.

The WGC report said global demand for gold jewelry jumped 37 percent in the second quarter to reach a record $14.5 billion.

The figures, compiled independently for WGC by Gold Fields Mineral Services Limited (GFMS), showed total identifiable demand made a substantial recovery in the second quarter of this year, rising 19 percent in tonnage terms compared to the same period last year — reaching $19.8 billion or a 27 percent increase in value terms year-on-year. Total demand reached 922 tons.

Net retail investment increased by 51 percent in tonnage terms to 132.9 tons and 60 percent in dollar terms to $2.9 billion compared to the second quarter of last year.

Investment in gold-backed Exchange Traded Funds (ETFs) was negative over the quarter, with small net redemptions of 2.6 tons. Total investment fell just 4.8 percent in tonnage terms and increased 1 percent in dollar terms at $2.8 billion. Total investment reached 130.4 tons.

Industrial demand was up slightly, 2 percent higher in tonnage terms to 116.5 tons and up 9 percent in dollar terms to $2.5 billion, a new quarterly record. Electronics demand, which grew strongly in 2006, also recorded a further 2 percent increase compared to a year ago period.

In India, the world's largest gold market, gold demand reached 317.2 tons, equivalent to half of the global mine output for the second quarter of 2007 because of more stable gold prices, a booming economy and the increasingly successful festivals in April.

In China, gold demand increased by 32 percent to 75.9 tons as compared to year earlier.

In US, third in the world in gold demand, gold jewelry demand dropped 4 percent in tonnage terms.

The report said in Russia's jewelry demand has grown steadily over recent years as consumption increased by 27 percent to 20.3 tons compared with second quarter last year.

Moaz Barakat, WGC's managing director in the Middle East, Turkey & Pakistan, said in a press statement: "We are pleased to report a very strong second quarter with demand for gold reaching unprecedented levels in a number of markets. A reduction in price volatility in 2007 has resulted in increased consumer confidence and, coupled with greater industry marketing activity, led to record levels of gold jewelry purchases in the region and globally in dollar terms."