Dubai: Gold, in any form, has now emerged the favoured souvenir for visitors to the UAE, as they try to take full advantage of the volatility the metal prices have had since the second-half of April.
Visitors from India certainly are buying their money’s worth, and so it seems are those from China, Pakistan and some of the other Asian countries. The preference is definitely for the 22 carat, which on Friday was at Dh163 a gram.
Buying activity picked up a notch since Thursday in the local gold souq, with significant support also coming in from visitors.
“There is a lot of retail support for price in the range of Dh160-Dh168 a gram, though the floodgates open at the Dh152-Dh158 level, which is what happened between April 11 and April 22,” said Cyriac Varghese, general manager at Sky Jewellery. “But for tourists and those flying back to their home countries now, buying gold or jewellery in the UAE offers a definite price advantage.”
According to anecdotal feedback, Indian customs are taking a more lenient approach towards gold and jewellery being brought in by passengers from the UAE. Also, the Indian government had raised the threshold — in value and gram — in the recent budget that Indians could bring back into the country.
The price differential between buying here and in India is 7 per cent, and on top of that there is the difference on the making charges.
Some of the retail chains have been offering pre-bookings, which helped lock in sales at Dh157 a gram during the week. Others waived making charges on gold coins to get retail buyers into shops this week.
“By removing the making charges, the intention is to engage with shoppers looking for the small value investment transaction,” said Shamlal Ahmad, director of international operations at Malabar Gold.
Historically, those who prefer to buy coins or bars represent between 5-8 per cent of retail level sales. Such transactions saw a marked spike in the period between April 11 and April 22 when gold prices went through a period of volatility unseen in recent years. Indications are that it touched the 30 per cent mark during this phase.
“The majority of retail buyers are not bothered by factors such as central bank sell-offs of bullion, dollar tracking upwards or weakening economic data,” said a bullion analyst in Dubai. “Their interest in gold is elemental, you see that among Indians and now in increasing degrees among Chinese buyers. Any downwards pressure on gold in the coming weeks, and it would set off another round of frenetic buying.”