Dubai: Dubai's gold industry sales rose 40 per cent in December and 5 per cent in 2006, boosted by growing tourism and the Dubai Shopping Festival, the chairman of the Gold and Jewellery Group, Tawhid Abdullah, said on Tuesday.

"Sales in the fourth quarter compensated the drop in the third quarter and were up 25 per cent compared with the same period last year," he said.

"The tourism industry is going pretty well and the shopping festival, Ramadan and Diwali have helped us achieve sales records," he said.

The Dubai Shopping Festival, which began in December and ends on February 2, is giving a big boost to Dubai's gold sales, Abdullah said.

"We could see a 15 or 20 per cent increase this year if prices hold at the current levels... so far the sales we have made in January are an indication that January's sales could go up as high as 40 per cent," Abdullah said.

Spot gold bullion was steady in Europe at $608.50/609.50 an ounce by 12.38pm GMT yesterday. It peaked at $730 in May its highest since a record peak above $800 in 1980. Since May gold has been trading between $543 and $676.

Dubai has its own jewellery manufacturers but imports made up 58 per cent of all jewellery sold at retail outlets, while exports account for 47 per cent of total wholesale volume.