Abu Dhabi - Arabstoday
Abu Dhabi jewellers are struggling to cope with surging demand for gold bars from customers expecting the price of the precious metal to rise even further, despite increasing more than 25 per cent this year.Stocks traded on the Abu Dhabi Securities Exchange have lost 4.7 per cent over the same period.The bull run in the gold market has transformed the business model for jewellers countrywide, who are replacing lost revenue from declining jewellery sales with the booming bullion trade. After rising for seven consecutive weeks, the longest rally since April 2007, the metal suffered a reversal late last week, falling by about 5 per cent since August 19. But it rose again on Friday, advancing 4.3 per cent to US$1,786.45 after Ben Bernanke, the US Federal Reserve chairman, said there were no plans to provide further stimulus measures. \"The global economy looks like it is heading towards what we faced in 2008,\" said Tareq Alashram, a 34-year-old Syrian electronic engineer who bought two 200-gram bars last week at Abu Dhabi\'s Madinat Zayed Shopping & Gold Centre. \"If I put my money in an Islamic bank account I will get a maximum of 2 per cent from any bank and there is nothing to hedge me against inflation.\"Gold is forecast to average $2,000 a troy ounce next year, Barclays Capital said in a report on Friday. Up to 30 customers a day are buying gold bars of 100 grams for about Dh22,000 (US$5,990) and 1kg bars for about Dh220,000 at Al Awadhi Jewellery in the centre. Abdullah Mohamed, the manager, said sales of these bars had surged by as much as 60 per cent in the past two months. \"I am selling 2 to 3 kilos worth of gold slabs a day to Emiratis, Arabs and Indians. For every five customers that walk into my shop, three are asking for those slabs,\" Mr Mohamed said. \"They are buying them because they know they won\'t take losses if the price drops like with jewellery, where a premium is paid for the cost of craftsmanship and commission.\" The number of customers coming and asking about them is incredible, said Riyad Musbah, the manager at Al Reyadh Jewellery, which is also in the centre. \"When gold hit a record of $1,215 an ounce last year and broke several barriers since we didn\'t see this kind of interest. But people are now becoming more aware with what is going on abroad and coming to terms with it,\" Mr Musbah said. \"Two months ago barely any customers would ask for these slabs, now easily 50 per cent of the customers that walk in are asking for them. The hoard is catching on gold prices rocketing. Those with spare income or excess cash are thinking they might as well not lose out on an investment opportunity.\" Suppliers of gold bars to jewellers say they are struggling to ensure there is adequate supply to meet demand. \"In the last 45-50 days sales have gone up by 35 per cent for these bullion bars,\" said Pauly Anthony, a financial controller at Gold Standard, a Dubai gold supplier. \"The bars are usually imported from Switzerland and Europe, but with most refineries in Europe closed or not functioning at full capacity, supply is now less than demand,\" he said. \"Most of the shops are running out of stock. Nobody was prepared to absorb the market condition here in the UAE.\" Local suppliers are now increasing deliveries to compensate for the rising demand and tightening supply from Europe. Gold imports have almost halved this month while local supplies, which used to account for 5 to 10 per cent of the market, have increased to 20 to 25 per cent. From / The National