Retail gold sales in the United Arab Emirates could drop further after the price of gold hit a record high, retailers said on Wednesday. "The market was in shock and everyone stopped buying gold because prices at that level are just not sustainable," said a sales manger at Kanz Jewels, one of largest retailers at the Dubai gold souk. "I think everyone is waiting for the prices to dip again but before that thing will remain very slow." Gold prices rose to a record high of $1,043.45 an ounce on Tuesday as the dollar dropped on a report, later denied, that Gulf Arab states were considering abandoning the U.S. currency for oil trade. Tax-free jewellery in the United Arab Emirates' gold souks and shopping malls was a major attraction for Gulf Arab and Western tourists. But since the start of the year the economic crisis has deterred visitors and shrunk consumers' disposable incomes, leading to a monthly average drop in gold sales of 30 percent in the UAE, retailers told Reuters. "And this is just the beginning, I think things will get worse before they get better for the jewellery and physical markets," said Mohamed Shakrachi, managing director of Emirates Gold, a Dubai-based gold bar and coin refinery. "The price is out of reach and a great deal of caution is being taken by consumers, which will send the physical market downhill," he added.

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