To:Bearcatbob who wrote (245) From: John Barendrecht Sunday, Jul 6, 1997 11:23 PM Respond to of 80032
Dubai gold trade picks up on price slump DUBAI, July 6 (Reuter) - Gold's plunge to a 12-year price low has stimulated retail turnover in Dubai's local jewellery and bullion markets but the main re-export trade to India remained sluggish, traders in the Gulf emirate said on Sunday.
Purchases of gold jewellery and bullion pieces, mainly by Dubai's large Indian and Pakistani expatriate community, had risen after several weeks of subdued activity after the yellow metal slumped to $325 an ounce, they said.
``The price drop has been good for business. Lower prices have attracted people back into the market,'' said a wholesaler, anticipating that the upturn in demand would prompt higher imports into Dubai from suppliers Switzerland and Britain.
Dubai's benchmark TT bar -- 3.746 ounces of 24 carat gold -- was quoted at 4,491 UAE dirhams ($1,223) on Sunday, down from 4,635 on June 29 and the year-high of 5,750 dirhams.
International spot gold was quoted on Saturday at $324.50-$325 an ounce, hammered to 12-year-lows by an announcement by the Reserve Bank of Australia on Thursday that it had sold 167 tonnes of gold to reduce its holdings.
Dubai souk-owners said that custom had picked up despite fears in other markets that gold was losing its role as a safe haven against inflation and currency volatility and that gold prices could fall further.
``People have flocked to the market in the last two days...Buying is more of a tradition that an investment decision. Dowries and family gifts still have to be bought,'' said one souk seller.
A majority of Indian sub-continent expatriates based in Dubai go home during the harsh Gulf summer and many of these take gold back either as presents or as a way to tranfer funds rather that using the banking system.
Despite buoyant retail turnover prompted by ``bargain- buying,'' Dubai's main trade in re-exporting gold to India was flat with little sign that India was increasing direct imports.
Dubai, one of the seven emirates that make up the United Arab Emirates (UAE) is the main feeder market to India which is the world's largest gold consumer.
``It's unlikely that India will increase imports until the end of this month at the earliest...The profit (margin) is very little at the moment,'' said one wholesaler.
Indian import interest centred on silver which was trading at a 30 cents per tonne premium to the spot price which was last quoted on Saturday at $4.54-56 an ounce.
The Indian monsoon season from June to early September is traditionally a precursor to heavy buying by crop farmers in rural communities. Heavy rains have already fell, rising the prospect of strong festival gold demand later this year
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