DUBAI (Commodity Online): Gold, the king of commodities, has emerged as the most happening investment vehicle in Dubai, the city of gold in Middle East.
According to figures from the Dubai Multi Commodity Center, gold imports by Dubai rose by 13 percent on a year-on-year basis to 300 tonnes in the first half of 2009. The gold investment demand in Dubai is going up that the city kingdom has beaten India--the largest gold consumer in the wolrd--in the imports of the yellow metal.
According to the data released by India’s apex bullion body Bombay Bullion Association (BBA), gold imports have been stagnant so far this year and was at 51.6 tonnes during January-June 2009, compared to 139 tonnes in the same period in 2008.
“High price of gold is the main reason for this heft fall in the import of yellow metals,” BBA president Suresh Hundya said. “Demand for gold has been falling ever since prices began to rule high hovering between Rs 14,500 to Rs 15,000 per 10 grams level in the Indian bullion markets,” he added.
Yes, Dubai is pushing India down as far as gold imports and gold investment demand are concerned. If you compare gold imports by India and Dubai, it is a big gap between the two Asian action centres of gold for the first half of 2009, said Mark Robinson, a bullion analyst based in Dubai.
Robinson told Commodity Online that bullion investment demand in the emirate is is very strong these days. Bullion investments are happening in gold coins, gold jewellery items and new gold jewellery shops are opening up across Dubai despite the economic slowdown, he said.
On Monday, Jeffrey Rhodes, chief executive of INTL Commodities DMCC, said taht that the yellow metal is growing in popularity both in Dubai and on a wider scale in the Middle East.
He told Reuters: "I think it's fair to say that the investment demand level for gold for the Middle East on the whole has been very buoyant. Physical gold is still king in the Middle East."
Harendra Kailath, Director for Gold and Precious Metals at DMCC said that the increase in the gold export from Dubai was driven by the higher prices and the gold listed at top of traders' inflation-hedging priorities.
Having taken the current bullish sentiments, the rest of the year would be better for gold, he added.
Meanwhile, the European Central Bank announced recently that a third Central Bank Gold Sales Agreement has been signed and will replace the existing deal in September.
As part of the arrangement, sales of gold will be limited to 400 tonnes per year, representing a decline of 25 percent from current regulations.
Eugen Weinberg, an analyst at Commerzbank, the second-largest bank in Germany, explained that the move will reduce the risk associated with gold and could push prices higher.
"Central banks are not such a danger for the gold price as they used to be in the 1990s," he said in an interview with Reuters.
"It was expected that there would be a renewal, but the renewal itself took some insecurity out of the market - it wasn't expected that they would reduce the selling volume by 100 tonnes a year."
With inputs from www.bullionvault.com
