Stock UAE Gold
Pre-summer buying activity was there, but most UAE shoppers preferred to make use of gold exchange programmes. Image Credit: Virendra Saklani/Gulf News

Dubai: A glimmer of hope has opened up for gold and jewellery shoppers in the UAE with today’s price dropping below $1,900 an ounce – and only the second time since March. Gold is trading at $1,893 and there is a chance that it could be headed towards $1,850 in this phase.

But will that be enough to tempt UAE shoppers? The UAE gold rate remains around the Dh213 a gram mark, but trends over the recent past show a spike in buying activity when prices are in the Dh195-Dh205 a gram range. For that, gold will need to move closer to the $1,850 an ounce mark – and lower.

That has been the ‘sweet spot’ for shoppers through the year, with jewellery retailers saying they had seen increased activity during the two- to three weeks from late February to end March, when prices had come down to $1,823.

“From a consumer perspective, it’s good to see gold is down from the elevated $1,900 plus range,” said a retailer. “If global trends force prices down further, then we should see a return of shoppers. Our shoppers are still easing their way back from spending during their summer holidays - or still outside the country taking a break.

“Shopping for gold even after this price drop may not be enough.”

Weak H1-23 for jewellery

The first-half was relatively quiet for jewellery buying in the UAE, with World Gold Council numbers confirming that. Also, a lot of the buying was actually shoppers trading in their old jewellery for new, which meant great savings for the buyers but not so much for the retailers. All through the period, gold at well above $1,900 was rated as the main factor in the lower buying interest.

Even with successive US interest rate increases, gold has remained at elevated levels. (Typically, such increases should have meant gold making a retreat in investor preferences.)

Buying activity in India - the second biggest consumer market for gold - remains subdued, with high local prices being the reason. Robust China demand provided the only glitter for jewellery in H1-23, but that too could come under stress in the coming weeks.

UAE retailers are hoping tourists will pitch in the coming days by showing some interest. "After prices dropped under $1,900 this morning, we had a few enquiries from tourists," said a retailer. "No purchases yet, and it could be they are hoping for some more price drops while they are here."

Each time gold dropped below $1,900 in recent times, it had surged strongly back. And leaving shoppers disappointed.

Will this time be different?