DUBAI: Gold refiners in the Middle East have bought record volumes of scrap from overseas as the global economic crisis forces cash-strapped consumers to sell their jewellery, an executive said on Sunday. Around 500 tons of scrap gold entered the Middle East in the first quarter compared with around 300 tons for whole of last year said Jeffrey Rhodes, the chief executive officer of INTL Commodities DMCC, an independent financial services firm based in Dubai. Since the start of the year there s been a flood of scrap gold from places like India and Vietnam into the Middle East as individuals around the world are looking for cash, said Rhodes. The price of spot gold seems to be holding up well against this flood of scrap, anything from broken jewelry to coins which refineries melt into gold bars, said Pradeep Unni, senior gold analyst at Richcomm Global Services. But if the supply of scrap continues to rise, it could weigh on the spot price, he said. Right now gold is trading at around $864 an ounce and I think that the strong investor demand mainly fuelled by the fact that gold is a safe haven is keeping the price at the level. But I think if the volume of scrap gold continues to escalate it will dampen prices to some degree, Unni said. Gold prices have picked up from a low of $680.80 in October. If we don t see the Indian economy picking up soon and a quick recovery of the rupee then the flood of scrap gold from India will keep the refineries here in the UAE very busy, said Unni. Samy Abu Ahmed, the production manger at Al Ghaith Gold, a Dubai-based refinery which buys 60 percent of local scrap gold, said he expects the supply of scrap to stay strong. The normal levels of processing gold per day is around 100-150 kilograms per day but recently these figures have been almost double as the volumes increase in the market, he said. And I expect the level of supply will remain fairly high till the end of the year as more people look at ways to increase their cash supply, he added. The high price of gold jewelry in the UAE is, around 100 dirhams ($27.4) per gram, is also encouraging individuals to sell said Corey Keller the general manger of Al Ghurair Giga one of the largest refineries in the UAE. The supply coming in now is really like a running tap and mainly coming from the sub-continent region as well as the local market, he said. The price of scrap gold is usually 1-2 percent lower than the market price of gold jewelry, Unni said.
