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Business Retail

Gold prices rise further and dent UAE shoppers' hopes of cheaper Eid jewellery buys

New week sees gold gaining another $10 and closer to $2,000/oz



For a second straight month gold shoppers are staring at prices in the $2,000/oz range. Even price lock-in offers will not matter much at these levels.
Image Credit: Virendra Saklani/Gulf News

Dubai: Gold has started the week with prices rising further to near $1,990 an ounce levels, disappointing shoppers in the UAE who were hoping for some dip ahead of their Eid purchases.

Some jewellery retailers had brought back price lock-in promotions ahead of the Eid buying, in the hope that last week’s levels of $1,975 would start to slip. Going by today’s evidence, that hope seems misplaced.

The Dubai Gold Rate is set at Dh225.75 a gram for 22K for the start of buying/selling on Monday. “We were hoping to see some activity on Eid gold buying from this week – but another $10+ jump on the ounce price will dent shopper confidence,” said a retailer at one of the bigger jewellery retailers. “Price lock-in schemes work only when the current price is rated as being on the lower side. At Dh225 levels, that’s not the case now.”

Lock-in schemes

Price lock-in offers allow shoppers to ‘book’ an order if they feel a particular day’s price is more favourable to them, and that the price could go up further if they wait. So, they place the order for a jewellery or gold bars/coins and with the intent of buying it at a later date. All they need to do by way of confirmation is place 10 per cent upfront and then buy within the stipulated period, of four- to eight weeks typically.

And if the price on the day they buy is lower than what they had booked at, they get the lower price.

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“Gold could retreat from these levels because there are many analysts who feel that $2,000-$2,010 levels may not hold,” said a retailer. “This is what happened in March, when gold rallied to $2,050 and then over the next few days dropped to $1,920+.

“For lock-ins, shoppers need to be sure they are not making the booking at a higher rate.”

Diamond + (free) gold?

Jewellery retailers are using gold’s volatility to shift shopper attention to diamond purchases this Eid. A couple of promotions have been released where diamond buys of a certain value would entitle the shopper to a 1 gram gold coin. Of course, there are the continuing offers related to discounts on making charges.

Retailers and shoppers, however, are waiting for gold prices to retreat to under $1,950 or under levels for some buying activity to restart. The belief is such a level would find favour with tourists, though not necessarily with resident buyers.

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