Middle Eastern gold demand has crashed into a supply shortage at this month's Dubai festival...
AS THE PRICE OF GOLD zoomed to $900 per ounce last Friday in London and New York, reports Commodity Online, buyers of the yellow metal were faced with a different kind of problem in the Middle East boom-town of Dubai.
There is an acute shortage of Gold Coins currently dampening sales at the annual Dubai Shopping Festival.
Trade-marketing group the World Gold Council (WGC) is one of the participants in this ongoing mega-fest (Jan. 15 to Feb. 15). Indeed, the WGC's annual promotion of gold in the Middle East during this festival has earned Dubai the name "City of Gold".
But this year, Dubai's biggest shopping carnival has been dampened by the shortage of Gold Bullion coins, for which there is a big demand.
"People are coming and asking for coins," says a manager for Joy Alukkas, a leading jeweler in the Gulf countries. "But there is a terrible Gold-Coin Shortage. Many gold and jewelry shops in Dubai do not have enough stock."
The manager told news reporters that the main reason for the short supply of gold coins is primarily due to the current heavy demand in Dubai, the main regional source for gold in the Middle East.
"All the jewelers offer special discounts and special offers for Buying Gold, and thus there is a spurt in gold purchases. So there is a shortage of gold coins here," the manager added.
Yogaani Bhatia, marketing manager for the World Gold Council, told Business Intelligence Middle East that retailers' feedback across the United Arab Emirates continues to remain positive.
"We do not expect an immediate or drastic downturn," she explained, because "Gold is seen as a strong hedge against inflation and investors believe in it strongly.
"In the UAE, there's been a drop of less than 14% in the demand for gold [resulting from the credit crunch and rising Gold Prices of 2008] and that is positive compared to other markets."