Soaring gold prices and the US economic crisis have hit Bahrain's jewellers hard - but they are hoping an Eid rush will balance the books.

People are buying less, though some are 'gambling' and buying in the hope prices will soar and they can sell it for a profit, say dealers.

Gold was selling at BD10.800 per gram yesterday, for 22 carat, compared to around BD8 per gram a year ago - meaning prices have rocketed by almost 35 per cent.

Prices were at BD9.500 for a gram around three weeks ago, before the latest economic crisis.

They are down from the record figure of $1,000 (BD387) per ounce in March, to $880 (BD332) yesterday.

The problem has been compounded by the dinar-dollar peg, which has seen the value of Bahrain's currency slip in tandem with the dollar, say jewellers.

Jewellers would not speculate on whether the dinar-dollar peg should be scrapped, but many blamed it for the drop in sales.

'Sales during the last 10 days have gone down considerably and we call it the '10 Dry Days',' Joy Alukkas country manager Henry George told the GDN.

'The reason for this, besides the existing global economic crisis, could be the Ramadan season.

'But we're expecting the sales to go up over Eid.

'However, nothing can be predicted because the global issues have not been sorted out yet.'

However, he said some people were speculating on gold prices rising even further and were buying it as an investment.

'Some people are tempted to invest in gold now because of the prices going up.

'Customers are still buying gold, but they can't buy the same quantity that they used to,' said George.

'It seems to be the best investment that one can make as it can be sold later when the prices go higher.'

However, he called this 'a gamble'.

Al Zain Jewellery marketing co-ordinator Mohammed Saidi said the soaring gold rate had reduced sales by nearly 15 per cent.

'When people consider the current high price of gold, they think twice about buying,' he said.

'People are panicking about the gold rates going up.

'Our sales have gone down from 10 to 15 per cent during the last three weeks.

'There is always a factor of uncertainty as the rates could come down tomorrow - we never know.'

However, Saidi said that though this uncertainty had affected every gold business in Bahrain, Eid would help.

Atlas Jewellery country manager Khalid Ibrahim pointed out that as long as the price of gold kept fluctuating, sales would be affected.

'Our sales has also been affected with the fluctuating gold price as people buy less than before,' he said.

'Since the value of the dollar is declining now due to an economic crisis, the rate of gold will definitely go up and remain unstable.

'Three weeks back the rate was quite good and sales were definitely high.'

However, Atlanta Jewellers managing director Antony Palathingal believes that a lack of the metal being produced, attributed to a labour issue among gold mine workers in African countries, has also contributed to the situation.

'Three weeks ago, when the rate was favourable, our store was swarming with customers,' he said.

'But now it's almost empty.'

'People now fear to spend on gold due to the uncertain rates caused by the American economic crisis.

'But for those who buy gold as an investment, hoping to sell it later for higher price later, the situation is good.

'The return from gold is much more than depositing money in the bank for an interest.'-TradeArabia News Service