Dubai: The drop in the price of spot gold on Thursday is likely to trigger another gold buying spree from customers-especially from India and the GCC.
Gold reached its lowest level in almost a week on Thursday, falling $2.93 an ounce to $1,453.81.
“The drop benefits local demand,” said Pradeep Unni, Senior Relationship Manager at Dubai-based commodities trading firm Richcomm Global Services.
He added: “there is demand for gold bars because we see premiums on these” — which retailers need to pay to ensure that they have enough incoming stock everyday.
As the wedding season approaches, buyers from India and the GCC will take the opportunity to buy gold bars and nuggets, according to Unni.
In the GCC, and especially in India, wearing and giving gold as gifts during weddings is a tradition. Also, in India, the buying increases during Hindu festivals, such as Guru Pushya Nakshatra, which falls this year, and Diwali in October and November.
Meanwhile, some retailers say that the small drop in prices will not increase demand for the precious metal; rather it will remain stable.
“It is very minimal and does not make any difference in more buying of gold. Our business remains sustained,” said Firoz Merchant, chairman of Pure Gold Jewellers in an email.
Investments
Similarly, a salesman at Joyalukkas at the Dubai Gold Souq said Thursday did not see an increase in buying or customers at the store. However, he expects to see more buying over the weekend.
Cash gold and futures fell to approximately $1,321 on April 16, marking its lowest point in two years. They climbed to an 11-day peak at $1,484 on April 26.
Meanwhile, investors operating in the futures market reacted to the drop in gold prices by holding fund-based investments from the market, according to Unni.
“They are waiting for the price [of gold] to stabilise, and then they will trade,” he said.
“Investors will be closely watching the international markets in the next two quarters,” said Sajith Kumar, CEO and director at JRG International and IBMC group.
