BEIRUT: The consumers’ demand for gold in Lebanon has been greatly affected by the record increase in prices of the metal worldwide said the owner of a jewelry shop in Beirut. The prices of gold in international market rose by 30 percent this year and now are trading above $1,150 an ounce, a record high. “The demand for gold is affected by 50 percent while that of diamond dropped by 30 to 40 percent as well due to the fact that diamond is sold most of the time with gold, Yasser Younes, a gold shop owner, told The Daily Star. 

Younes believes that nothing can be done in this case to increase sales for the time being because prices have increased worldwide and people need time to get used to the new prices. “Advertising won’t benefit a lot now because prices have remarkably increased,” he said. “New designs may be a good idea but not for the time being.” 

He noted that Lebanon is well known for its gold manufacturing industry but this won’t help much because manufacturing requires a great amount of liquidity. 

Gold and other commodity prices have surged in recent months amid a move away from the dollar, which has been slumping. The move accelerated last month on a report that Gulf states may stop using the greenback for oil trading.

The metal is also winning support from fears over a possible spike in inflation, as gold is widely regarded by investors as a safe store of value. 

The worldwide increase in gold prices did not only affect the demand in Lebanon but also in other Arab countries. “Consumer demand witnessed a sharp drop of 50 percent not only in Lebanon but also in other Arab countries and in different percentages,” said Nada Zaghal, sales representative at Chaar and Co., a well-known jewelry retailer with branches in Jeddah, Riyadh, Kuwait, Dubai and other countries. 

Zaghal said people today visit their shops to look at new designs rather than buy. “Those who buy do it as an obligation mainly if they want to get married and offer these items to their brides,” she said. “Even those who buy these items for such purposes, they don’t buy a full set like they used to do before.” 

Zaghal’s comments were echoed by Elie Nawbar, owner of Nawbar Jewelry in Beirut, who said that demand dropped by about 80 percent and that people are not relying on gold for their gifts anymore. 

Nawbar expects the price of gold per ounce to increase to $2,000 in the coming four or five years. He said people are selling these days instead of buying. However, he believes that people will get used to the new prices and demand will improve after some time.

“We do not plan to expand now because of the high costs of rents and operations in Leba­non,” he added. “We have to minimize costs for us to be able to stay in business nowadays.” 

Wael Alaa, owner of Le Carat jewelry in Hamra, noted that they are relying on the marketing of precious stones instead of gold for the time being. “We are using precious stones more than gold in our designs for us to be able to meet the demands of people with small budgets,” he said. “We offer 4.25 grams of gold and pearl for $150 for example.” 

According to a report by the UN statistics division, Lebanse exports of gold including gold plated with platinum reached $314.6 million in 2007 compared to $120.2 million in 2005. It added that imports decreased to $265.4 million in 2007 compared to $333.6 million in 2005. 

The volume of gold exports in Lebanon for the past two years exceeded the volume of imports said Abboud Boghos, a wholesaler and supplier for a huge part of the Lebanese gold market. “The demand on gold dropped by 50 percent but I believe that gold sales will go back to normal very soon,” he said. 

He added that people in this part of the world will likely not abstain from buying gold for too long. “They just need to get used to the new price,” he said.

 

 

LONDON: The price of gold soared past $1,150 per ounce here on Wednesday for the first time in history, buoyed by the weak US currency and central bank purchases of the precious metal, analysts said. 

In afternoon trade on the London Bullion Market, gold jumped to a record high $1,152.85 per ounce, after forging a series of all-time peaks in recent weeks. 

In the foreign exchange market, the euro climbed as high as $1.4977 in late afternoon trade, in the wake of disappointing data on housing starts and inflation in the United States. 

A weak greenback makes dollar-priced assets such as gold cheaper for buyers using stronger currencies, and tends to stimulate demand for them. 

“Gold is getting support from a number of sources currently,” said analyst David Morrison at spread-betting firm GFT. 

“Like all risk assets, it is benefiting from the sliding dollar, but it is also a safe haven for investors who are concerned about the safety of other currencies,” he told AFP. 

Morrison added that central banks were also building their reserves of the precious metal. 

“We are also seeing [gold prices] rise as central banks become net buyers, after being net sellers for more than 20 years. 

“China and Russia have added to their holdings, and could easily increase them again. 

“Meanwhile, India and Mauritius have just bought gold from the International Monetary Fund (IMF).” 

The IMF announced Monday it had sold 2 tons of gold to the central bank of the Indian Ocean island of Mauritius for nearly $72 million. – AFP