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In Pictures: UAE gold shoppers use discounts on making charges and other offers to add to their collections

Jewellery retailers mix and match offers and discounts to keep shoppers interested



In the past, changes to gold prices were only concerned about the state of the global economy, the US Federal Reserve’s policy, and the way inflation rates were performing. These days, trends in the gold market are just as likely to be decided by COVID-19 infection rates and vaccination charts.
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Gold prices remain stuck at a steep $1,825 an ounce plus levels – in the last 30 days, they have gone up by $50 dollars. Any chance of prices softening during summer seems such a remote possibility. So, any plans UAE shoppers had about topping up their gold and jewellery collection should be done with a lot of planning. (On Friday (July 30), the Dubai Gold Rate for 22K was Dh208 a gram.)

According to the London-based World Gold Council, the price rise notwithstanding, there will be enough demand for bars and coins – which has been a constant theme with shoppers since the second-half of last year. Jewellery sales too will show improvements over 2020, but not in spectacular ways. Average jewellery sales this year will likely be lower than the five-year average.

Will shoppers get comfortable at current price levels? Gold did dip under $1,800 in the year-to-date, but on those occasions, prices got immediately pulled back. Shoppers thus didn’t have much of a glimpse of prices closer to $1,700-$1,750.

Jewellery sales in the UAE made gains in the first-half of this year from the all-time lows of 2020. But with tourists still absent, retailers have been completely reliant on resident shoppers turning up at the stores.

All the leading jewellery retailers have cut making charges, and shoppers have responded by ‘trading up’. Where they bring in their old jewellery and replace them with the latest collections. The hope is that with the retailer having cut making charges, it will be a win-win for shopper and seller alike.

There are still shoppers waiting for prices to head back to pre-COVID-19 normalcy, which would be somewhere around the $1,600 mark. For that to happen, a lot of factors need to come together.

The global economy needs to start humming to the tune of higher growth, and key markets such as India will need to notch up success in controlling the virus for good. “The economic picture has been improving, but there are still potential headwinds,” warns Krishan Gopaul, Senior Analyst for EMEA markets at World Gold Council. “Gold price alone isn’t the decisive factor any more. The pandemic will still be a significant influence.”

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In China, the world's biggest gold buying market, retail sales have been improving drastically. A lot of it is due to pent-up demand from last year. In the April to June phase, demand 8% higher than in Q2-2019 and 5% above the second quarter average for 2010-19, says WGC in its latest report. Gold will not be going out of fashion in China…
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But in India, the second quarter gold demand was flattened by the second wave, as fresh lockdowns were imposed in all of the major cities to combat the pandemic. "The lockdown and store closures impacted wedding demand and – for a second consecutive year – Akshaya Tritiya festival demand," says the World Gold Council report.
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Amidst all that uncertainty for jewellery, bars and coins held steady. Consumers in the UAE too have joined in, eschewing jewellery and instead padding up their gold collections with these. Moreover, there is no VAT on gold bars.
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According to WGC, global bar demand saw the strongest year-on-year growth (by 18%), while coin demand recorded a more modest increase (7%).
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In the UAE, jewellery retailers will be pinning hopes on tourists finally making a return as and when flights resume from the Subcontinent and elsewhere. Stage 2 of the UAE's jewellery sector rebound will need those shoppers to get back.
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