UAE gold shoppers stock up on bars
THIS WEEK SALES OF BARS, COINS SHOT UP TO NEAR RECORD LEVELS
Gold shoppers in the UAE were picking up 10- and 20-gram bars in “record” numbers this week and making full use of their VAT-free status.
On November 5 alone, more than two tonnes of gold and gold jewellery were sold in the UAE, and of these bars and coins could have made up between 10-15 per cent. Typically, sales of bars and coins account for 2-4 per cent of daily gold purchases.
Even 1-tola bars — 11.66 grams of 24K gold — recorded significant demand during a week that marked the Indian celebrations of Diwali and Dhanteras and a peak period of the year for gold consumption. (This year’s Dhanteras was on November 5, which explains the spike gold sales had that day. In Dubai, 22K gold was at Dh140.25 a gram yesterday.
Gold coins, which are usually in 4- and 8-gram formats, carry the 5 per cent VAT surcharge. But gold bars are deemed “investment assets” and hence excluded. For shoppers conscious about their spending budgets, this matters.
“Instead of going for smallticket jewellery purchases, where the gold component would typically be 15-16 grams, these shoppers are opting for bars instead,” said Abdul Salam K.P., Executive Director at Malabar Gold and Diamonds. “There’s an immediate saving of around Dh8 a gram that they would otherwise pay as VAT.”
The local gold retail sector has had an extremely difficult year, with shoppers put off by the extra payouts and the fact that gold prices had been trending higher for most of the year. The July to end-September period was particularly troublesome with slightly over six tonnes of gold and gold jewellery sold in the UAE, according to the World Gold Council. That compares with the 10 tonnes plus quarterly sales have been averaging in recent years. In fact, so far this year, there have only been three days when gold sales went past the two-tonne a day mark. The first was on April 18, which coincided with that other key Indian celebration of Akshaya Trithiya, and then again on August 10, when prices of 22K slipped from the Dh140’s to below Dh135 a gram.
“Gold bar sales this week have been exceptional,” said T.S. Kalyanaraman, Chairman and Managing Director at Kalyan Jewellers. “On Dhanteras, we had 24K gold bar sales at our UAE stores up by 66 per cent over last year. Even gold coin sales gained 32 per cent year-on-year.”
As for smaller jewellery retailers, their share of bars and coins sold during the week could be even higher. Many of these outlets are operating on bare minimum inventory and shed their high-priced jewellery.