haven buying remains firm in the driving seat for the precious metal.RIYADH: Gold demand in Saudi Arabia is expected to remain steady next year despite higher prices, a World Gold Council (WGC) official said Wednesday. “Although prices are higher, consumers are becoming more sophisticated, realizing the enduring value of gold,” Bisher Diab, the WGC Saudi consultant and manager told Zawya Dow Jones. The WGC said earlier in its latest quarterly report that tonnage demand in the Middle East declined 11 percent in the third quarter of 2010 to 60.4 tons from 68 tons in the third quarter of 2009. Saudi Arabia and the other Gulf countries witnessed a drop of 10 percent year-on-year, the report said. The decline in the UAE (-9 percent) and Egypt (-8 percent) was the smallest in volume terms in the Middle East, it added. However, Diab said even as demand fell in tonnage term, “in the fourth quarter of this year and in 2011, we expect demand to be steady,” he said. The WGC report further said the demand for gold in the six GCC countries as well as Egypt rose 16 percent in the third quarter of this year to a staggering $2.6 billion over the corresponding period in 2009 at $2.3 billion. The demand for gold for investment purposes was worth $273 million, up 38 percent over the corresponding period last year. Saudi Arabia saw the value of gold demand rise 13 percent to $1.09 billion in the third quarter from a year earlier. Volumes, however, fell 11 percent to 26.4 tons, from 29.8 tons during the same period. “We have several projects and programs in the Saudi market that will drive demand and change the perceptions of the consumers,” Diab said. “We want to ensure that the perception of value is the real assessment over the price and educate consumers.” Saudi Arabia ranked first by consuming the yellow metal worth $1.09 billion in the third quarter, an increase of 13 percent over the corresponding period in 2009 when the figure was $920 million. But the volumes decreased in Q3 of this year as a total of 26.4 tons of gold was consumed in Saudi Arabia, down 11 percent from 29.8 tons in the same period last year. The UAE ranked second as it consumed the precious metal worth $741 million, up 11 percent over the corresponding period in 2009 when the consumption was worth $600 million. The demand for gold in other GCC countries recorded 11 percent growth. Gold worth $266 million was consumed in Q3 of 2010 from $239 million in the same period a year ago. A total of 6.7 tons of gold was consumed during Q3 of 2010, down 13 percent from 7.7 tons in the same period last year. Gold firmed to its highest in nearly three weeks Wednesday as growing fears about Portugal's debt pummeled the euro, sending bullion priced in the single currency to a record high. Gold traded above $1,400 an ounce for the first time Wednesday, silver set a settlement high for the year and oil hit a two-year high. Spot gold was bid at $1,392.09 an ounce at 1021 GMT, against $1,384.94 late in New York on Tuesday. US gold futures for December delivery rose $6.90 an ounce to $1,391.90. Euro-priced gold rose to a peak of 1,070.11 euros an ounce, an all-time high, while gold priced in sterling also touched a record 895.05 pounds an ounce. Investors also poured money into gold, sending it to $1,410.10 an ounce on Nov. 9. It was a record in dollar terms but well below its peak in the early 1980s after accounting for inflation. Gold for February delivery added $18.60 to settle at $1,386.10 an ounce Tuesday. About 90 percent of the Saudi market favors gold jewelry while the rest is into retail investment, according to Diab. The Kingdom's central bank lifted its reported reserves to 322.9 tons from 143 tons, making it the world's sixteenth-largest holder of gold, according to second-quarter figures issued by the WGC earlier this year.
