DUBAI: 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 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 in an interview.

Dubai is the Gulf's centre for the import and re-export of gold, bringing in 489 tonnes of gold in 2006 and exporting 274 tonnes, according to the Dubai Multi Commodities Exchange, 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 tonnes, although exports during the same period fell 12.3pc to 142 tonnes, 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.

The Gulf trade and tourism hub launched the region's first gold futures exchange in 2005 as the economies of Gulf Arab nations boomed on a windfall oil income.

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. The way to go forward is to increase the number of members and leverage the great number of clients of those members," he said.

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