DUBAI The dip in gold prices to a five-year low this week has sparked high expectations of a buying frenzy as consumers loosen their purse strings.
Dubai jewellers said they were catering to a huge influx of shoppers after a two-month slowdown as the price of 22k gold fell to Dh127.50 for one gram on July 20, from Dh137.75 a month ago. Similarly, 24k gold slipped to Dh134 for one gram from Dh145 earlier.
Great opportunity
Viral B. Taleshwar, managing director of Viral Jewellers, who has already reported a 30-35 per cent increase in sales, said: “It is great to see this kind of upsurge at a time when things would have otherwise been slow – traditionally July and August are lean months because people are away on vacation. Ramadan is also a slow month for sales.”
He said: “People are very excited about the price fall. Most of our shoppers are going for 22K jewellery, mainly chains, necklaces and bangles.”
G R Anand Ananthapad-manabhan, managing director of the recently launched GRT Jewellers, said: “The last few days have been good for us as customers have leveraged from the fall in gold price. Such a market scenario will not only see an increase in footfall but also in the actual conversion rate of the purchase. Being closer to the wedding season, consumers are making most of the opportunity.”
Karim Merchant, managing director and CEO of Pure Gold Jewellers, which has 125 stores, said: “The record fall in prices is giving consumers a great opportunity to add gold to their asset portfolio. This trend is more pronounced among the South Asian community which has traditionally bought gold as an investment or for occasions.”
Chandu Siroya, vice-chairman of the Dubai Gold and Jewellery Group, said: “The market has been very jittery for the past two-three weeks. Physical demand for gold at the retail level was down by 25 per cent compared to the same period last year. But consumers waiting in the sidelines have started buying again.”
Merchant said: “Many factors: have contributed to the fall in gold prices: US dollar in a strong position because of an improving US economy; China’s massive selling of gold reserves which spooked investors; and the US Federal Reserve’s suggestion that interest rates should rise by the end of the year, which means it will be expensive for investors to hold gold and so are selling it.”
Indian import duty curbs a deterrent for some
Indians, among the largest consumers of gold in the UAE, said strict import duty curbs levied by their home country is making it increasingly difficult for them to travel with jewellery.
Both tourists and residents flying back to India say customs officials stop them on arrival as they invariably carry more the permitted amount of gold.
According to India’s Central Board of Excise and Customs, they can only take around Dh2,891 (Rs50,000) worth of gold if they are male or Dh5,782 (Rs100,000) if they are female. Anything that is over this value, up to a maximum of 1kg per passenger, incurs a 10 per cent import duty.
“It is very tempting to buy gold at the current prices but what is the use? I cannot buy anything substantial here as I will have to pay duty at the airport,” said Kshama, a tourist from Bengaluru.
“The limits are way too low. How can you can get a decent chain or bangle, even a small pair of earrings, below this ceiling?” asked D. Krishna, a Dubai resident.
