Saudi Arabia gold sales rose almost 17 percent in volume and 30 percent in value in 2007 from the previous year.

"The economy of Saudi Arabia, especially after the euphoria of the stock market cooled off, grew and that helped the gold demand in the country," said Moaz Barakat, managing director of the World Gold Council (WGC) in the Middle East, Turkey and Pakistan.

"According to our preliminary estimates, gold demand in Saudi rose by almost 17 percent volume and 30 percent in value in 2007 compared to the previous year, and I think the market still looks positive," he told Reuters in an interview.

Four of the seven Gulf Arab stock benchmarks dropped more than 35 percent in 2006.

Last year's demand in the UAE increased by almost 12 percent in volume and 20 percent in value from the year before as tourism grew, Barakat said.

"Increasing demand from tourists lifted the market, and if Dubai, the heart of the UAE, was not affected by volatile prices in September and October, we would have seen better figures."    

Dubai is a long-established market for gold bullion and wholesale and retail jewellery, where the trade is fuelled by strong demand from the Arab world and India, the world's top gold market.

Record gold prices, coupled with a 6 percent drop in Dubai's gold sales value in October, have deepened anxieties among traders that the Gulf Arab emirate may lose its lustre as a regional gold hub.

"The market recovered as we approached December, and we had also a strong demand from India, which is the sailor of the gold market," Barakat said.

World gold prices rocketed more than 30 percent in 2007, hitting an all-time high a week ago. Gulf Arab and Western tourists visit the UAE to shop for discounted, tax-free luxury goods in huge shopping malls and the gold souk.

Regional gold producers expanding their manufacturing capacity and sales campaigns in Egypt have significantly boosted demand in the Arab world's most populous country, he said.

"Egypt was the best performer in the Middle East last year. The market saw a 20 percent increase in volume and almost 35 percent increase in value," Barakat said.

Fourth quarter demand figures were not immediately available, but Barakat said: "They were neck in neck with the figures from 2006." - Reuters