Dubai: Shoppers could have snapped up between 9 to 11 tonnes of gold and gold jewellery at stores in the UAE through the first month of the year, with retailers in Dubai accounting for as much 8 tonnes. These sales estimates are in line with the take-up rates in January last year, despite the extremely difficult circumstances the wider retail sector has been experiencing in recent weeks.
“There seem to be a lot of ‘gold as safe haven’ buying taking place right now,” said Abdul Salam K.P., a member of the board at Dubai Gold & Jewellery Group. “It becomes clear as there were fewer of the Dh20,000 and more transactions during the month and more of the smaller ticket purchases.
“To retain the January 2015 volumes is in itself a victory of sorts for the jewellery trade. There’s been a shake-up of consumer confidence by what’s been happening in the economy, and retail sector in particular has been deeply impacted.
“In this context, gold purchases seem to one of the few silver linings the retail sector has been seeing. With these sentiments driving the purchasing, shoppers were willing to overlook the fact that gold prices had actually inched up since January 1.”
Bullion started the year at Dh121.25 a gram based on Dubai Board Rate and was at Dh127.5 on January 31. For the better part of the month, it was averaging around the Dh124-a-gram mark. (Apart from the 9-11 tonnes bought at the stores, a further 56 kilos were given away to winners of the daily raffles as part of DSF 2016.)
Taking the average of Dh124 a gram during January, jewellery sales across UAE stores would have fetched between Dh1.11 billion to Dh1.36 billion during the period. And the benefits were filtering across the trade.
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“There was increased participation from the trade [for DSF] this year - Incremental sales during DSF is considered as one additional month of sales for participating outlets,” said Tawhid Abdullah, who heads the current Dubai Gold & Jewellery Group panel. “Based on sales patterns, 70 per cent of January sales would have been to resident shoppers and the rest made by visitors.
“That Western and Arab shoppers were also active can be made out from the demand generated for 18k- and 21k-gold merchandise.”
Between late December and end January, much seems to have changed in the UAE’s shoppers’ mindset on gold. The overwhelming sentiment that gold prices will drop well below $1,000 an ounce - and stay there - has subsided. This, more than anything else, has set off the buying activity last month, and, in turn, giving an enhanced lustre to gold’s safe asset status.
“January’s sales tally for the local gold trade need not be an exception - at the prevailing prices, there should be continued buying support,” said Salam. “In two of three core consumer markets for gold - India and the Gulf [China being the other] - January offtake volumes have brought in a lot of stability.”
If Chinese shoppers started doing the same with their New Year coming up next week (February 8), the gold run may have just started.
