Dubai: India’s ongoing economic woes could prove to be a bright spot for the UAE’s gold and jewellery trade. While India has been taking steps to control domestic consumption of the precious metal and driving gold prices higher, this has presented an opportunity for expat Indians to buy jewellery at a steep discount to what it costs in India.
They could then sell the same in India and pocket a handsome amount in the bargain.
“Depending on the weight and type of jewellery, the price difference could be substantial and this is what should drive a lot of the traffic by expat Indians to local jewellers in coming weeks,” said Shamlal Ahmad of Malabar Gold and Diamond. For instance, a 10-sovereign (80 grams) gold chain could be lower by Dh3,000 vis-à-vis what it fetches in India at current rates. At current rates, such a chain would cost Dh12,580 in the UAE.
Local jewellers are expected to come up with major campaigns targeted at the Indian consumer to entice them to buy now and make use of the differential in India. They will have some convincing to do as Indian expats will also be using the new low that the rupee has struck against the dollar (which now fetches Rs63) to repatriate funds rather than buy gold.
The last three months have been lackluster for the local gold trade as consumers over-bought during the price dip in April. Of late, gold prices have been headed in the opposite direction and this has again left consumers doubting what would be an ideal time to make a re-entry.
According to the World Gold Council’s latest tracker for the second quarter, China and India continue to drive global gold jewellery demand, with both recording 50 per cent gains over the corresponding period last year.
