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