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Saudi gold consumption tops SR16.5bn

Saudi Arabia: Monday, August 17 - 2009 @ 15:29

Companies in the gold manufacturing and retail sectors in Saudi Arabia look forward to the recovery of demand for gold during the next period, hoping that it will exceed the current level.

Recovery expectations of increased demand coincide with the summer festivals that are held in several Saudi cities including Jeddah, Abha, Baha, Taif, Madinah, and the Eastern Province.

Saudi Arabia has seen a growing demand for investment in gold in the retail sector (bullion and coins), where the volume of consumption of 1.7 tonnes in Q4 2007 increased to 6.8 tonnes in Q4 2008, tripling the volume of consumption.

Despite this Saudi Arabia’s global ranking in terms of demand for jewellery and gold jewellery fell to seventh in the last quarter of 2008, as demand fell in the central and eastern regions of the kingdom.

Increased consumption

Recent statistics show that there are more than 6,000 retail shops in Saudi Arabia selling SR8bn worth of gold annually, and the annual volume of demand for gold is nearly 200 tonnes.

Consumption of gold (jewellery, bullion and pounds) in the Middle East fell in 2008 by an estimated 2% compared to 2007, with a drop in Saudi Arabia and the UAE by 4%, and in the rest of the GCC by 13%. Egypt was the only exception, witnessing a good level of stability and performance in late 2008, when the total demand rose by 11%.

Consumption figures show that the levels of retail investment in gold (alloys and pounds) had increased. The region has seen a big increase in the volume of investment in gold during the last quarter of 2008 compared to the same period of 2007. In Saudi Arabia it climbed by 300%, 67% in Egypt, 38% in the UAE and in the rest of the Gulf States by 2%.

Growing demand

Saudi Arabia ranks fourth in the global demand for gold after the United States, India and China, amounting to approximately 200 tonnes annually. It is no longer an emerging market, but it has clearly begun to shift into becoming a production centre of gold and jewellery.

The kingdom ranked first among the Gulf states in terms of the demand volume for gold, while the UAE came second with a growth of 21% with sales of $401m compared with $333m, followed by Kuwait which ranked third.

The Eastern Province is the first in sales of gold and diamonds, followed by Riyadh and Jeddah. In general, the influx of large numbers from outside the kingdom for Hajj and Umrah contributes to the rise in gold sales in Saudi Arabia. Saudi women are also ranked as the highest consumers in the Gulf and Arab States.

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Monday, August 17- 2009 @ 15:29 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.

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