'Gold is now over-priced for shopping: Dubai jeweller

Dubai: With Dubai gold rate sticking to around Dh375 levels all through this week, the feeling among UAE shoppers is that gold is over-priced’. It’s a sentiment that more and more gold and jewellery retailers are sharing in.

“Yes, gold is over-priced,” said Anil Dhanak, Managing Director of Dubai-based Kanz jewels. “We have reached a stage where there are very few shoppers and many retailers. It's exactly like a situation with there being more matchmakers then brides and grooms.”

Gold prices have been on tear since February-March and have stuck to well over Dh360 for the better part of the last two months. It is showing up in sales.  

June and July have been exceptionally tough months for gold retail sales in the UAE and other Gulf markets, with the price being the major sticking point. In Dubai, the Dubai Summer Surprises’ gold raffles have helped mop up some smaller sized gold purchases, but they have not been able to compensate for overall demand drop.

Even the tourist buying has dropped, obviously with fewer visits happening during peak summer. In April, when gold was starting the surge that would take it to current levels, tourists were still buying gold.

But once the Dubai gold price sort of stuck to over Dh360 a gram for 22K, that’s when significant numbers of resident-shoppers decided it was time to take a break from gold buying.

“What we have seen in the last three months is when daily gold price movements have seen drops by Dh4-Dh5, then that gets UAE resident-shoppers interested,” said a retailer. “But not for much else, even when heavy promotions have been on offer.”

UAE jewellers have responded by offering price-offs on making charges more frequently. They have also tried to swing shopper attention to diamond jewellery options, where discounts of up to 50% are available this DSS.

But shoppers still haven't started to feel comfortable paying for gold at Dh360-Dh370 levels. And this is why even with straight discounts on making charges, the UAE jewellery market has not been seeing any sort of sustained demand return.

That's why Rohan Siroya, CEO of Evermore Jewellery says: "People are buying jewellery based on their need - and desire - of that moment. For anything else, it’s a wait and watch."

And it's more wait and more watch until such time gold prices start to see drops again. Will they see it happen by end of the month?