Business | Markets
Jewellery sales likely to sink further with gold at $1,000
The UAE gold and jewellery industry believes the $1,000 per ounce price of gold will deal a new blow to jewellery sales, which have been weak so far this year amid sharp price fluctuations.
- By Shakir Husain, Staff Reporter
- Published: 00:29 March 14, 2008
Dubai: The UAE gold and jewellery industry believes the $1,000 per ounce price of gold will deal a new blow to jewellery sales, which have been weak so far this year amid sharp price fluctuations.
"Sales are already down 30 per cent in volume this year. In value, we are like the same period last year," Dubai Gold and Jewellery Group managing director Tawhid Abdullah told Gulf News.
He said a 50 per cent jump in the price of gold in the last six months "is a bit too much".
The market was expecting gold to cross the $1,000 psychological price threshold, but it came earlier than expected, said Tushar Patni, chairman of Abu Dhabi Gold and Jewellery Group.
Speculative investment
"There is too much speculative investment in gold, and we were expecting it to reach $1,000 this year, but it came too soon. Everyone is caught off guard," he added.
Gold jewellers say unstable gold prices are detrimental for the trade. The high price of gold is driven by the US dollar's continuing fall, which is encouraging funds to put money in the yellow metal, which becomes more attractive to investors in times of inflation and uncertainty in equity markets.
Although there have been price corrections in the past few months, they have not sustained.
Patni expects the gold price to rise further by $100-$150 before July.
"The retail market has gone down. People are not buying if they do not have a compulsion to buy," he said.
Abdullah said consumers are still buying some jewellery but in lesser quantities.
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