All that glitters is gold in the UAE
dubai — All that glitters is gold in Dubai. This adage proved right as sales of gold, jewellery, and bars and coins shone in the UAE during the second quarter of 2017 and this trend is expected to remain strong during the remainder of the year.
Gold and jewellery sale in the UAE jumped nine per cent in the second quarter of 2017 as compared to same period last year, World Gold Council data showed.
UAE consumer sales rose from 12.6 tonnes in the second quarter of 2016 to 13.6 tonnes during the April-June period of this year, an increase of nine per cent. Jewellery demand rose a similar percentage from 11.2 tonnes in the same period last year to 12.2 tonnes in the previous quarter, the data showed. In addition, total bar and coin sales also shone during the period, rising seven per cent to 1.5 tonnes.
Implementation of VAT... could be another factor [for] customers to take advantage of pre-tax prices Joy Alukkas, chairman and MD of Joyalukkas Group
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Joy Alukkas, chairman and managing director of Joyalukkas Group, attributed stronger sales to “lower prices in the international market as well as attractive offers and promotions during the Dubai Shopping Festival. The implementation of valueadded tax on nonessential (including jewellery) items that will take effect from January 1, 2018 could be another factor as customers try to take advantage of pre-tax prices”.
He said, globally, the current downtrend will continue but should ease up towards the end of the year since demand for gold generally rises towards the New Year. But in Dubai and the UAE, with a mostly Asian expat buying community, he predicts demand will stay the same and sales could even increase closer to major festivals, such as Diwali and the festive season.
Shamlal Ahamed, managing director for international operations at Malabar Gold & Diamonds, said auspicious days to buy jewellery such as Akshaya Thritiya were in April, hence, there were great offers and promotions by the jewellery retailers which helped increase the sale.
In addition, he attributed higher sales to affordable gold prices and residents going back to their home countries and buying jewellery as gifts.
Commenting about the secondhalf forecast, Ahamed expects the positive trend to continue in the jewellery retail sector in 2017. He sees increased growth from October 2017 due to multiple factors like festivities (Diwali), holiday season gifting, shopping festivals (DSF) and tourist influx during the winter months. However, the local population is also expected to increase, thanks more jobs likely to come up in preparation for the Expo 2020.
Global sales
Globally, World Gold Council said gold demand in Q2 2017 was 953 tonnes, a fall of 10 per cent compared with the same period in 2016. Similarly, demand fell by 41 per cent in the first-half of 2017, which slowed to 2,004 tonnes. Demand for jewellery of 480.8 tonnes was eight per cent higher year-on-year, driven by strong sales in India.
India drove global Q2 jewellery demand growth almost singlehandedly as demand shot up to 126.7 tonnes compared with just 89.8 tonnes in Q2 2016. India’s demand was boosted by festivals, weddings and improved rural sentiment. Estimates suggested that Akshaya Tritiya-related festival sales were up by around 30 per cent year-on-year in India.
Central banks also continued to buy gold, but at a more modest pace than in recent years, totalling 94 tonnes, a 20 per cent increase on the previous year. The most recent quarter saw Turkey’s central bank adding to its gold reserves — its first significant purchase since the 1980s,” World Gold Council said.
Alistair Hewitt, Head of Market Intelligence at the World Gold Council, said: “There are a few things to watch out for in the rest of the year. Inflation data out of the US looks soft and markets have pushed out their expectations for a rate rise. The monsoon is looking good in India and, providing the market adapts to the new GST, we may see solid demand around Diwali. And as the next generation of smartphones gets rolled out we may see good support for technology demand.”
— waheedabbas@khaleejtimes.com