Stock Dubai Gold
UAE gold shoppers are still waiting for a 'proper' price, even after the fall to a 3-month low. What could that ideal price be? Image Credit: Ahmed Ramzan/Gulf News

Dubai: UAE gold shoppers are just not getting the price drops they were hoping for. And this is impacting overall sales for the local gold and jewellery sector, making it the weakest performing retail category in the first-half of 2023, according to market sources.

Clearly, gold’s current levels – it’s at $1,919 an ounce today and Dh214.5 a gram for 22K – are denting consumer demand. Even the traditional demand spike before summer travel has not materialised so far, gold retailers say.

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“There was some improvement on Thursday (June 29) after bullion prices dropped to $1,905 levels and people wanted to do some Eid buying,” said a retailer. “But many were waiting for further price dips on Friday – and they will have been disappointed that it actually shot up to $1,919.

“In UAE gold rates terms, those 24 hours added Dh1.75 a gram to the price – while shoppers were expecting a drop by those levels.

“The average spend by a customer is down significantly in the first six months. It would seem that shoppers are yet to get used to prices of over Dh210 a gram.”

All this in a week when gold slipped to a 3-month low and even looked on course to slip below $1,900, which it last saw in late March, when prices were at the $1,815 levels. This is exactly what had potential shoppers and retailers all excited last Thursday – that prices will drop to around $1,850 an ounce levels and help refresh demand. (Gulf tourists – especially Saudi ones – to the UAE were however busy on the gold purchase front all through the Eid break.)

Everything costs more

Retailers are still hopeful they can whip up some demand for gold ahead of the summer travel season. Even here, they might be disappointed. Airline ticket rates are back to their pre-Covid levels, and that eats into shoppers’ budget for discretionary spending on items such as gold.

Plus, shoppers are also showing some fatigue. “They just don’t want to be buying gold at a time when prices are this high – and then having to see it drop just weeks later,” said a retail analyst. “Gold prices need to stabilise at some level before shoppers are convinced. Right now, they are not satisfied with being told that prices will rise further in the future.

Stock UAE Gold
“The gold as a ‘safe haven’ concept is in need of some freshening up,” said analyst.

Buoyant consumer buying

They may be showing caution when it comes to gold, but UAE consumers sure are spending this summer - on fashion, travel, cars, restaurant outings and staycations. The overall consumer mood is upbeat, and retailer sources say that the latest Dubai Summer Surprises is off to a good start.

Expect further price see-saws

The gold price range will continue to be volatile through this month and ahead of the July 25-26 meeting of the US Federal Reserve, which may or may not raise interest rates before taking a break for summer. (In June, the Fed decided to hit the pause button.)

Not just that, there is also the renewed discussion about possible recession for some of the major economies. And recessions tend to favour gold prices – by going up.

Gold retailers do all they can

To fire up some demand, UAE gold and jewellery retailers have put in place all options – there’s cashback, discounts on making charges, price lock-ins and raffles. And the ultimate one – no price loss when exchanging old for new.

That continues to be what residents continue to do – trade in. Whether that’s gold coins, bars or jewellery they are holding for something new. This has become the standard response from UAE’s gold consumers to beat price levels of Dh210 a gram and more.

Expect them to do more of the same.