Gold sales at some of Bahrain's biggest jewellers have doubled as customers take advantage of lower prices that have affected markets worldwide, a report said.

Demand rocketed after the price of yellow metal dropped by as much as 14 per cent in the last month, according to the report in the Gulf Daily News, our sister publication.

Speculation that Greece and Spain were going to sell their gold reserves to pay off their debts was reportedly responsible for the crash.

Prices in Bahrain dropped from a high of BD19.25 ($50.86) per gram of 24-carat gold to BD16.54 during a four-day period last month.

They have since recovered to BD17.83, but remain around 8 per cent lower than average.

"We are one of the country's leading gold sellers and on average when gold is not at such a peak we would sell about 1.5kg of gold a day," said Alukkas Jewellery sales executive Sujith Mukundan.

"In the week following the low rate of gold we sold about 50kg of gold. We have had no shortage as Alukkas has more than 90 stores worldwide with its own wholesaler in the UAE which has been able to supply us."

Mukundan said despite recovering gold prices, its store in the Gold City was still selling 2kg to 3kg a day, double the average.

Customers in Bahrain have reportedly been snapping up varying amounts of gold weighing between one and 100 grams.

"We usually receive our daily gold supply between 10am and 11am and we close at about 12.30pm for lunch but by then our stocks are already depleted," said Bex Money Bahrain Express Exchange manager Gowri Shankar.

"The demand is still very high but the supply is low and from what we have been told the supply will not stabilise for at least another week. People are waiting for our supplies to come in the morning and within a couple of hours it is all gone.

"The problem is that the demand for gold globally has risen dramatically to the extent that the gold processing factories cannot meet it and these factories supply to everyone, not just Bahrain."

Shankar explained that 1-gram, 5-gram, 10-gram and ounce gold bars were in high demand by regular consumers and larger bars were being scooped up by other retailers and jewellers.

However, he said the shortage in gold supplies was being artificially created to raise the price.

Fluctuation

"The supply of gold is not low. The problem is dealers don't want to take the risk of bringing in gold bars when the prices are not stable as they could lose if the prices drop," said Bahrain Chamber of Commerce and Industry pearl and gold committee member and Al Sarraj Jewellers managing director Mohamad Hussain Malim.

"Importers are worried about the gold rate fluctuation. They have gold but don't want to sell it as they have purchased it at a higher price and don't want to sell it at a lower rate. In fact, gold miners are actually losing because of the lower rates, and that is why they don't want to sell to dealers.

"There is plenty of gold in the local and global markets but what people are doing is creating a scarcity to drive up the prices. Because of this game there will be a small rise but I believe that the prices of gold will stabilise shortly at a rate of between $1,450 (BD547) to about $1,550 (BD584) per ounce (31 gram),” Malim added. – TradeArabia News Service