Business | General
Traders expect buoyant sales in 2011 as investors choose gold
It is one of the few commodities which is continuing to appreciate
- By Arno Maierbrugger, Deputy Business Editor
- Published: 00:00 January 5, 2011
- Image Credit: Pankaj Sharma/Gulf News
- On the contrary, people are still eager to invest their money in bullions and jewellery, especially in the UAE where the resale price of gold is comparably cheap as there are no sales taxes imposed and quality is checked by authorities.
Dubai: The surging gold price will have no negative effect on sales of the precious metals, gold traders in Dubai say.
On the contrary, people are still eager to invest their money in bullions and jewellery, especially in the UAE where the resale price of gold is comparably cheap as there are no sales taxes imposed and quality is checked by authorities.
"People still prefer to buy gold as it looks like it is one of the few commodities which are still appreciating," Tomy Joseph, General Manager, Marketing and Business Development, of jewellery chain Joyalukkas told Gulf News.
"We had a very good year in 2010 with overall sales having grown 15 per cent compared to 2009," he added. "For 2011, we expect similar gains in sales. I don't see slower sales due to the rising gold prices."
Trading hub
Dubai has established itself among the world's top 5 gold trading places, a study by the Ministry of Foreign Trade revealed on Tuesday.
The study shows that the value of UAE imports of gold amounted to $14.5 billion (Dh53.2 billion) in 2009, registering a 10 per cent increase from 2008.
In terms of volume, 547 tonnes were imported in 2009 in comparison with 524 tonnes in 2008, registering a 4 per cent increase. This increase in the trade of gold in 2009 "affirms the special status of the gold trade in the foreign trade structure of the country," the study said.
"Dubai has positioned itself as the city of gold," Joseph said. "Not only for residents, but also for the many transit travellers who are buying at the airport. It is the only place where this is happening to that extent."
Promotions
Joyalukkas will intensify its sales promotions this year, Joseph added. The chain currently operates 25 outlets in the UAE, 15 of them in Dubai.
Another important gold retailer, Dubai Duty Free, recorded an 11 per cent increase in gold sales in 2009, according to recently released statistics. Gold sales were the number three selling category after perfumes and liquor.
"We are thrilled to have posted such a positive year in 2010. Our sales have been consistently buoyant throughout the year and we are pleased to see that our penetration level continues to be high and that we sell to around 45 per cent of all passengers," said Colm McLoughlin, Managing Director of Dubai Duty Free.
Further growth
Pure Gold Jewellers, a retailer in the Middle East and India, has seen a sales increase of 30 per cent in 2010 compared to the previous year, said Firoz G. Merchant, the company's chairman.
"We have witnessed a remarkable increase in sales this year and we are on track for further growth in 2011. This year we opened sixteen stores in India, five in the UAE and two in Kuwait," he said.
Merchant said despite he added, "a marked increase in diamond jewellery sales compared to gold, the yellow metal has retained its value as a safe investment." He added that the company will open 200 new stores over the next five years. Currently, it is running 85 shops of which 69 are in the GCC.
UAE ranks third
The UAE was ranked third, globally in gold exports in 2009 with a 10 per cent share of all global gold exports at a value of $10.5 billion, Dr Abdul Hamid Radwan, an economic consultant with the Ministry of Foreign Trade, stated in the recent gold trade study issued by the ministry on Monday.
The US came in first place with a 11.5 per cent share valued at $12.1 billion followed by Australia with a 11.2 per cent share, Hong Kong came in fourth place with a 9.5 per cent share valued at $10 billion and Canada lies on the fifth rank with a 7 per cent share in gold exports valued at $7.3 billion.
Gold prices this year are expected to reach a peak in the $1,455 to $1,480 per ounce range from the current $1,420, according to Pradeep Unni, senior analyst at Richcomm Global Services in Dubai. He said that he is convinced that "fundamentals based on market uncertainty are still driving the price, and those fundamentals are intact."
The Dubai Gold and Commodities Exchange, part of the Dubai Multi Commodities Centre, said in its recent outlook on Sunday that its analysts expect "2011 to herald further increases in the gold price to fresh record highs as demand for bullion continues at unprecedented levels." The assumption is based on "both safe-haven demand and physical demand from the likes of India and China."
Have your say
Do you still consider gold a safe investment? Will you be investing now? Or will you wait for prices to drop? Tell us.
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