Dubai: For the first time ever, UAE’s gold shoppers are not looking at daily price movements or heading to jewellery stores to check out the latest designs. Between now and April 9, gold retailers in the UAE are shuttering their shops as part of the general reduction in social and retail activity brought on by the COVID-19 outbreak.
“It was informally decided by gold retailers to cease operations for 48 hours initially, but now it’s been extended up to April 9,” said Cyriac Varghese, General Manager at Sky Jewellery.
Prices too seem to be playing their part - within the last week or so, Dubai Gold Rate has shot up from Dh166.5 a gram to Dh182.5 today… and chances are that it will go up further.
Since Monday, international gold prices are bulking up all over again - from $1,471.47 an ounce on March 19, it is now comfortably over $1,600 levels.
Gold is getting a ‘stimulus’ shot
Each time the US Federal Reserve and other central banks go big on stimulus package, investors (not shoppers) pile into gold. And these days, that’s happening a lot.
“Gold is glittering in a global monetary response to the COVID-19 crisis goes well beyond the Fed… as the world tuns on the monetary and fiscal taps to dampen the horrendous economic effect,” said Stephen Innes, Chief Global Markets Strategist at AxiCorp, in a note. “The overriding demand factor is the anticipation of a tremendous fiscal stimulus downpour, which should cement gold’s longer-term bullish outlook.”
What should UAE gold buyers do?
Stay put and wait out all the turmoil in the global markets? Or even at these high prices - anything above Dh180 a gram - try and “lock in” rates before they go any higher?
“We are seeing increased activity on our online booking and order site,” said Abdulsalam K.P., Executive Director at Malabar Gold & Diamonds. “That’s because a lot of shoppers want to lock rates ahead of this year’s “Akshaya Trithiya” late next month.
“At the rate gold is moving these days, no one wants to take their chances closer to that day.” (Akshaya Trithiya is an Indian festival where buying gold or other high value items is considered auspicious. This year, it will be marked on April 26.)
Will this mean gold buying finally shifts online Shoppers in the UAE have so far not been big on buying gold and jewellery on-line. Several retailers had made attempts in the last two to three years to convince shoppers, especially the younger ones. But so far, these operations remain only a small percentage of their overall sales.
Abdulsalam reckons this could change… gradually. “It’s the small-value items that are seeing the most demand online, but it will shift to big-ticket pieces,” he said. “Maybe, with more usage, the resistance the traditional gold shopper feels towards online buying will lessen.
“The need to touch or wear the jewellery piece at the outlet itself is the biggest mental block that needs to go. Plus, there are so many small neighbourhood jewellery stores all over the UAE that people just do not see the need to do online shopping.”
Wait… and watch
Karim Merchant, Group CEO and Managing Director at Pure Gold, shares the sentiment about gradual change in shopping habits. He’s also realistic about where gold buying would figure in the general heightened anxiety about the virus spreading its vile ways.
“Given the COVID-19 situation, we see a more wait-’n-watch approach on online bookings for Akshaya Trithiya,” he said. “We have our online shopping across our website and our third-party channels on noon.ae and amazon.ae.”
But UAE gold retailers remain hopeful - that even with gold heading higher, there will be enough shoppers wanting to make that one investment on Akshaya Trithiya.
Some in the trade also look back to what happened during and after the Global Financial Crisis of 2008-09, when gold in Dubai was at Dh204 a gram in 2011, when the international price was its highest ever at $1,921 an ounce.
Nobody is saying it out loud that gold will once again head towards those levels, at least for now. But not many thought gold would breach $1,700 in the first-half of this year. But it did.
No one was thinking gold would shoot up by Dh15 a gram in one week. And that’s exactly what’s the case now.
“How long this impasse continues is the million dollar question,” said Varghese.
Malabar Gold & Diamonds operates more than 50 stores in the UAE and 130 plus in the Gulf, employing about 1,400 personnel to man the showrooms. “For now and the next two weeks, all of them will be at their residences,” said Abdulsalam K.P., Executive Director. “These are unprecedented times and the industry needs to keep on making out-of-the-box solutions.”
Sky Jewellery’s Cyriac Varghese says that all of his showroom staff, numbering more than 100 at 10 outlets, will have their full salaries paid on time. “For the time being, we are only focussed on the immediate future and meeting our management commitments,” he said. “Nothing else should matter.”