Dubai: A mix of Diwali and Biden has worked wonders for UAE’s jewellery market, with shopper traffic returning to nearly 70 per cent of levels last seen well before the pandemic. Just under a month ago, jewellery stores were averaging visits 15-20 per cent of what it used to be before COVID-19 struck and took demand for gold down with it.
The Indian festival of Diwali is one of the peak points in the UAE’s gold buying calendar, but there are other external factors at work. A Joe Biden Presidency has soothed global markets, and gold prices started dropping after polling trends started favouring him. In recent days, gold had gone down to $1,850 an ounce levels, well clear of the $2,075 – an all-time high – it was at in early August.
On Friday, the international price was around $1,879, while in local terms, Dubai Gold Price for 22K was at Dh213.5 a gram (against the peak of Dh237 in August). “It’s not just about Diwali – gold’s recent softening is convincing shoppers to return,” said Cyriac Varghese, General Manager at Sky Jewellery. “Today and tomorrow will be exceptionally busy for the gold retail trade.
“If more shoppers are convinced, we can even hope that levels will touch 90 per cent pre-COVID-19 traffic. We can only hope that there will be more days like this in the next few weeks, especially with the DSF starting next month.”
More local shoppers are convinced to get onto the gold bandwagon, after it became the one asset category that actually showed strength during the worst of the COVID-19 months. That was enough to spur bullion prices to record highs, and had analysts convinced that $2,200-$2,300 levels should not be far away.
All domestic affair
That the current demand is being fed entirely by residents is the most interesting aspect. The jewellery retail business is still some weeks away from seeing tourists start to make their presence felt at the stores.
The absence of tourists is why jewelers in the Deira Gold Souq were affected disproportionately by the fall in demand after the pandemic. There, stores were averaging 15-25 per cent in recent weeks, and retailers had shut down some locations and furloughed staff to try and save costs.
In Dubai, the Gold & Jewellery Group is trying to stir as much demand as possible by offering raffles during the Diwali promotions. That’s a first for the Group as they have typically gone for umbrella promotions during DSF and DSS.
Whatever be the reason this is the best week the UAE’s gold sector has had this year. If DSF 2021, which opens December 17, can create more demand and the tourists return, retailers will have turned one difficult corner.