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Jewellery will sustain gold industry

Posted by vmsalama on April 12, 2008

By Vivian Salama

The National


DUBAI // Gold jewellery rather than gold bars will increasingly fuel the precious metal’s market growth, a new study says.

The results of the 2008 Gold Survey, released yesterday at the sixth annual City of Gold Conference in Dubai, showed there was a shift towards gold as a luxury good and away from it as an investment.

“There is no doubt in my mind that investment isn’t the important driver in the current market climate,” said Paul Walker, chief executive officer of GFMS, a London-based gold consultancy.

“When gold prices got stuck for a while [last year], I believe that what sustained the gold industry is jewellery. Jewellery takes gold further and further from the market.”

“Fluctuating gold prices, which have reached the $1,000 per ounce mark, poses new challenges for the gold trade,” said Sultan Bin Saeed Al Mansouri, the Minister of Economy. “However, this has also spurred renewed interest in diamonds and other forms of jewellery, which is thus sustaining the combined gold and jewellery sectors.”

Mr Walker suggested that the gold price, after climbing to historic highs, could flatten out over the next couple of years or even drift lower, falling to between US$650 and $750 an ounce. If this happened, the gold market would depend heavily on jewellery sales to sustain itself as investors shied away from the metal.

According to the World Gold Council, gold consumption in the UAE increased eight per cent last year in spite of a 15 per cent escalation in price. Retail gold sales for 2007 in the UAE increased 24 per cent; 33 per cent in Saudi Arabia; 29 per cent in Egypt; and 19 per cent in the other Gulf countries.

The UAE diamond trade was also on the up. In 2007, diamonds and diamond jewellery worth Dh41.21 billion ($11.23 billion) were sold in Dubai – a 53 per cent increase over 2006. 

A recent diamond certification partnership between Damas, one of the largest jewellery retailers in the Middle East, and the Dubai Multi Commodities Center (DMCC), was also expected to help sales this year. 

The industry also welcomed new rules governing the trade in Dubai.

“New regulatory changes in Dubai will give the necessary tools towards boosting Dubai as a leading financial and trading centre,” said Ian McDonald, Executive Director of Gold for the DMCC. “We look around at the best regulatory practices around the world and clearly the UK has the best practices because it is principle based, not legislative like the US.” 

The conference produced little agreement on what the likely impact of the current global economic downturn would have on the jewellery industry. Still, most participants said education and training were an important component towards the industry’s long-term survival.

The National Institute for Vocational Education (NIVE) found that by 2015, the number of highly skilled workers, which included chemists and engineers, needed to be increased five per cent while the number medium-skilled workers should be increased three per cent. At the same time, there should be an eight per cent decrease in less-skilled labourers.

“There are plenty of jobs but there is currently a lack of the relevance in the education we are giving our people,” said Naji Almahdi, executive director of NIVE. “Human development will enable a knowledge led society in which all participants are working towards Dubai’s economic vision.”


2 Responses to “Jewellery will sustain gold industry”

  1. rivazge said

    It’s a real fact that jewelery can sustain gold industry…

    thanks for nice information….


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