UAE's gold shop­pers make hay in three-week run

The Pak Banker - - BUSINESS -

DUBAI: Shop­pers in the UAE cleared an es­ti­mated 13 tonnes of 22-carat gold and jew­ellery from out­lets in just the last three weeks from July 20 by mak­ing full use of prices that had dropped to an av­er­age of Dh125 a gram dur­ing the pe­riod.

Based on these es­ti­mates, buy­ers would have spent a quite sub­stan­tial Dh1.5 bil­lion dur­ing the shop­ping spree in what oth­er­wise have been an ex­tremely lean pe­riod for the lo­cal gold trade. (It was on July 20 that gold dropped to a fiveyear low to $1,080 an ounce.) What is all the more re­mark­able is that nearly all of the spend­ing has been done by res­i­dent shop­pers, with lim­ited con­tri­bu­tions from visi­tors given the time of the year. Such a spend­ing pat­tern has also pro­pelled the gold and jew­ellery cat­e­gory to be the best-per­form­ing within the UAE's wider re­tail sec­tor dur­ing this time frame.

"Lo­cal spend­ing on gold dur­ing the three weeks re­mained con­sis­tently high on all days, ex­cept for the one day when China de­val­ued its cur­rency and con­se­quently gold prices had a spike," said Ab­dul Salam K.P., Trea­surer at the Dubai Gold and Jew­ellery Group and Di­rec­tor at Mal­abar Gold & Di­a­monds. "The 13 tonnes of off­take ex­ceeds what­ever de­mand pat­terns we have seen in re­cent months, in­clud­ing the 7-8 tonnes that move on av­er­age dur­ing the DSF pe­riod in Dubai."

The latest up­turn - and with­out the ben­e­fit of any ma­jor pro­mo­tions - will also com­pen­sate for a dim sec­ond quar­ter when jew­ellery sales in the UAE were down 22 per cent, ac­cord­ing to World Gold Coun­cil es­ti­mates. It is clear that con­sumers see prices be­low Dh130 a gram as the emo­tional driver to get them to spend heav­ily on gold. "The sud­den de­cline in prices has surely en­cour­aged re­tail ac­tiv­ity in all the stores within the UAE - ir­re­spec­tive of the size of the re­tailer," said Tawhid Ab­dul­lah, Chair­man of Dubai Gold & Jew­ellery Group. "In fact, smaller jew­ellers too have earned their share of the cur­rent wind­fall as all cat­e­gories of con­sumers have a ten­dency to pur­chase gold when price falls."

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