Retail sales of gold and gold jewelry have reportedly fallen as much as 60% during January in Dubai, the heart of gold trade in the Middle East. However, the drop in gold sales is not due to a lack of demand.
Dubai's traditional gold market has collapsed mainly because of the lack of tourists. Local jewelers, who have been waiting for a big chunk of tourists to come in for Dubai's annual shopping festival, have seen less tourist inflow to the city that has badly affected the gold sales.
Retail sales of gold have also been lowered as a result of the shortage of gold coins, for which there is a big demand. In a normal buying environment, the biggest demand during the Dubai shopping festival is for gold coins weighing 8 gms or a sovereign. Gold coins weighting 2 gm and 4 gm are also quite popular.
Overall, Dubai's jewelery sector had its ups and downs during 2008 with a significant increase in Q3 in followed by a slight drop in gold jewelery consumption in Q4. In the neighboring UAE, the increase in gold demand reached 22% in tonnage terms; equal to 56% increase in value terms.