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Dubai: High gold prices, exceeding $1,000 per ounce earlier this year, depressed demand for the precious metal in key Gulf consumers in the first quarter, World Gold Council (WGC) figures show.
Demand dropped 19 per cent in the UAE, 25 per cent in Saudi Arabia and 30 per cent in other Gulf states between January and March compared with the same period last year.
Egypt, another key regional gold consumer, bucked the trend as gold consumption rose 15 per cent to reach 18 tonnes, WGC said in a statement.
"The rise in the gold price provoked a surge of both jewellery and investment buying in Egypt due to the widespread belief that the price was going to rise further," it said.
Gold prices have since fallen from the record high of more than $1,030 an ounce in March.
The council, which is promoted by the gold mining companies, said the surge in gold prices affected markets worldwide.
India, the largest market for gold, continued to see a drop in consumption, with volatile prices pushing the demand almost half the levels of first quarter of 2007.
The high prices boosted the value of quarterly UAE sales by 15 per cent to Dh3.1 billion. The sales value increased seven per cent in Saudi Arabia, while for Egypt it went up by 64 per cent.
Moaz Barakat, managing director of WGC in the Middle East, Turkey and Pakistan, said demand from investors in the UAE rose from 1.9 tonnes to 2.3 tonnes.
"Despite the shortfall in tonnage in the recent months, gold's safe haven and hedging characteristics have been a major attraction to investors during this period of instability, greater inflationary fears and falling dollar," he said.
Barakat said gold demand in the second quarter will be much better than the first quarter because of holiday purchases and the Arab weddings season.
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