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Dubai gold souk

brings in the buyers

DUBAI: The 240 gold shops crammed into Dubai's gold souk are testimony to the lure of all that does glitter in this small but cosmopolitan Gulf emirate.

Dinesh Bhalani, an Indian who has owned a shop in the souk for the last 20 years, is smartly attired with gold-rimmed glasses, gold chain, plated pen and diamond ring.

He easily explains why the souk is full despite the evening's humidity.

"The world's cheapest gold is here," he says, revealing a dull tooth made of...gold.

Outside his family-run shop, colourful Indian saris contrast with the traditional black abaya of Arabic women and the bleach white robes of their male companions.

A young Filipino couple try out 18 carat rings.

Mixing in the souk's alleyways are also sun-seeking Western tourists ferried to its bargains by small boats known as dhows on the city's creek waterway.

American Express does as nicely as rupees, the local dirham and increasingly U.S. dollars held by Russian and Armenian visitors, who are also attracted by electronic goods in Dubai.

All can be bargained against the shopkeeper's calculator.

"Best price, best price," one reserved shopkeeper claims, politely pointing to a painted sign outside his shop written in Russian, to a small group of lingering, pink-faced tourists.

The tourists are happy to enter the brightly lit shop. The shopkeeper already has his calculator in hand.

It is competitive and tax-free retail prices which draw the crowds and has made Dubai one of the gold industry's main re-export centres and the major supplier to India, itself the world's single largest consumer of the precious metal.

Because of the number of shops and amount of gold imported into Dubai, shopkeepers contend they are making only a profit of 20 dirhams ($5.45) on the standard 3.7 ounce Ten Tola bar of gold which sells at nearly $1,500.

Dubai, one of the seven emirates in the oil-rich United Arab Emirates, is forecast to import a massive 350 tonnes or more than 11 million ounces of gold bullion this year, according to the Dubai offices of the World Gold Council.

Most of the gold imported into Dubai comes from Switzerland, where supplies from main producers South Africa and the United States end up for trade.

Tawfique Abdullah is the manager of the Damas chain of jewellery shops. His father opened the souk's first shop of imported jewellery in 1958 and local shop owners recall souk legend that a goat was sacrificed to bring good luck.

The poor goat must have worked since Damas is now the largest chain in Dubai, with 18 retail outlets.

Inside his main office in the souk, evening workers are putting around a dozen deep and insulated rectangular trays of crafted necklace pieces into vaults.

"Fifteen years ago our main customers were Arab expatriate teachers working in Dubai. Now it is Americans and Europeans," Abdullah said.

Since the collapse of Dubai's pearling industry in the last century, the gold trade has been a backbone of the economy even despite the discovery of oil in 1966.

Now the business is being heavily promoted by Dubai's ruling family as a centrepiece in developing the emirate as one giant shopping mall -- tax free, of course.

A recent Dubai Shopping Festival raffled away 43 gold bars.-Reuter