Gold’s current high price levels are actually turning out to be a boost for demand among UAE’s shoppers, and taking jewellery retailers by surprise.
“Because the last two months — when gold reached six-year highs — were exceptionally tough for retailers,” said Joy Alukkas, Chairman of the network that carries his name. “And then to see shoppers coming back this month even though prices haven’t dropped all that much, that’s a surprise. The best Diwali gift ever.
“It could be that UAE gold shoppers now are adjusting to prices at or slightly above $1,500 an ounce. And because they want to do some buying before it gets any higher. All the bets are on gold getting pricier.”
A situation quite likely if the world economy slips into a period of ultra-low growth … or even worse.
Which is why local gold shoppers are again picking up coins and bars alongside their traditional jewellery purchases — gold to them is the best “defensive” asset they can get their hands on right now.
Current prices are 21 per cent higher than during October 2018. (On September 24, gold was at $1,534 an ounce and the local 22K at Dh174 a gram. On October 1, it was at $1,460 and the lowest level in the past month.)
All through the last two months, many in the UAE were actually selling their gold holdings and making quite decent profits for themselves.
These were typically on 22K gold bought when it was at Dh120-Dh135 a gram levels and sold when the price had zoomed past Dh170.
“The UAE gold trade did see a sharp increase in consumers selling gold during September, because they had an excellent opportunity to cash in when bullion touched a six-year high,” said Shamlal Ahmed, Managing Director for International Operations at Malabar Gold and Diamonds. “But those shoppers are now making a return to buying — our internal records show that up to 60-70 per cent who sold earlier have since bought at one of our stores.
“It’s because gold seems to be the only asset that’s gaining these days — against last October’s $1,226 an ounce, it’s now at the $1,490 plus levels and could shoot up further. Compare that to stocks, property, currency — everything’s down.
“It’s also why we are now seeing an improvement in buying by tourists to the UAE for the first time this year. Gold at current prices are back in favour.”
As part of KPMG’s ongoing efforts to raise awareness of key industry developments, KPMG in Bahrain is calling out…354 Views | the publication reaches you by | Dubai Today
Do you have information you want to reach our readers?
The global freelancing market is set to grow $20bn by 2020. Where does the market stand here in…