Dubai 's gold imports are expected to rise in the second half of 2007 despite higher prices as buyers grow accustomed to them, the head of the Dubai Gold and Commodities Exchange (DGCX) said.

"We tend to think that if you have higher prices you will have lower physical demand and vice versa... but in this region this has not been the case," DGCX chairman Colin Griffith said.

In May 2006, spot gold bullion hit a 26-year high at $730 an ounce. It closed at $676.40/$677.15 an ounce on Friday.

" Dubai is clearly getting the lion's share of the gold business and there is a little bit of shift to this part of the world," he said.

Dubai is the Gulf's centre for the import and re-export of gold, bringing in 489 tones of gold in 2006 and exporting 274 tones, according to the Dubai Multi Commodities Exchange (DMCC), DGCX's controlling shareholder. "The figures (of imports) have been strong this year."

The emirate's gold imports for the first half of the year were up 14.4 per cent at 278 tones, although exports during the same period fell 12.3 per cent to 142 tones, DMCC said in July.

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

" India is expected to see a strong demand, and since it is the power house, Dubai will benefit too. This year's figures are a continuation of an upward trend and I don't see a reason why this trend would not continue," Griffith said.

Griffith said he expected the turnover on Dubai's new gold futures exchange to rise steadily this year as more of its 204 approved trading members become integrated into the system.

"We are attracting very good names and we have got a few in the pipeline," he said. "The way to go forward is to increase the number of members and leverage the great number of clients of those members."

New members will boost the bourse's volumes, which are buoyed partly by the physical gold trade in Dubai, Griffith said.

"The gold volume is a little bit low at the moment compared to April and May. But it is a quiet period and I would certainly expect once the summer period ends the volume will pick up again," he said.

The DGCX is seeking to become a major commodities centre. It has also launched silver and currency futures contracts. It plans to introduce silver options and futures contracts for steel, cotton, freight rates and assorted pulses. "We may launch the steel contract in October, followed by plastics. Pulses contract may either be introduced by the end of 2007 or early next year," Griffith added.