@Indians: Are you still buying gold?

@Indians: Are you still buying gold?

According to the World Gold Council, gold jewellery sales in Dubai fell drastically last year – mainly thanks to the exit of many Indians and the financial crisis.

February 18, 2010 3:12 by Aarti Nagraj

The UAE, especially Dubai, was once considered the city of gold by people living abroad, particularly those from India. Anybody taking a trip to Dubai from India was expected to return with some gold jewellery. Always. While the mindset still exists to quite a degree, it seems like the financial crisis has persuaded many Indians to curb their frenzy for the yellow metal.

In 2008, the UAE gold industry was worth $3.07 billion – but demand fell by 33 percent in 2009, when the industry was worth around $2.29 billion, according to a World Gold Council (WGC) report issued on Wednesday.

“Jewellery sales in the UAE and Dubai in particular are continuing to suffer under the pressure of future expatriates [in particular Indian workers], the economic downturn and problems in the property sector,” the report said. “Lower than normal tourist numbers have also continued to impact, although these showed signs of improvement in the latest quarter.”

“Thousands of jobs were lost and that this directly had an impact on the volume of gold sales in Dubai,” Vasant Mehta, chairman of the Mumbai-based Gem & Jewellery Export Promotion Council told Reuters last month.

“There were so many Indians and Pakistanis who were laid off during the economic crisis and many of these workers used to buy gold from Dubai to send home to their families and that’s why the drop in UAE gold sales was worse than India,” he said.
Along with the reducing tourist numbers, the WGC report also blamed the increasing the price of gold for a fall in its consumption; its prices went up by 12 percent in 2009.

While some of our friends going on a vacation to India are still buying gold, Kipp feels that the Indian fascination for Dubai gold has faded a bit. Do you agree, or is it just a temporary after-effect of the crisis? Does buying gold still feature first on the itinerary of your family/friends coming from abroad?