Stock Dubai gold shopping Covid
For a second straight month gold shoppers are staring at prices in the $2,000/oz range. Even price lock-in offers will not matter much at these levels. Image Credit: Virendra Saklani/Gulf News

Dubai: Gold has started the week with prices rising further to near $1,990 an ounce levels, disappointing shoppers in the UAE who were hoping for some dip ahead of their Eid purchases.

Some jewellery retailers had brought back price lock-in promotions ahead of the Eid buying, in the hope that last week’s levels of $1,975 would start to slip. Going by today’s evidence, that hope seems misplaced.

The Dubai Gold Rate is set at Dh225.75 a gram for 22K for the start of buying/selling on Monday. “We were hoping to see some activity on Eid gold buying from this week – but another $10+ jump on the ounce price will dent shopper confidence,” said a retailer at one of the bigger jewellery retailers. “Price lock-in schemes work only when the current price is rated as being on the lower side. At Dh225 levels, that’s not the case now.”

Lock-in schemes

Price lock-in offers allow shoppers to ‘book’ an order if they feel a particular day’s price is more favourable to them, and that the price could go up further if they wait. So, they place the order for a jewellery or gold bars/coins and with the intent of buying it at a later date. All they need to do by way of confirmation is place 10 per cent upfront and then buy within the stipulated period, of four- to eight weeks typically.

And if the price on the day they buy is lower than what they had booked at, they get the lower price.

“Gold could retreat from these levels because there are many analysts who feel that $2,000-$2,010 levels may not hold,” said a retailer. “This is what happened in March, when gold rallied to $2,050 and then over the next few days dropped to $1,920+.

“For lock-ins, shoppers need to be sure they are not making the booking at a higher rate.”

Diamond + (free) gold?

Jewellery retailers are using gold’s volatility to shift shopper attention to diamond purchases this Eid. A couple of promotions have been released where diamond buys of a certain value would entitle the shopper to a 1 gram gold coin. Of course, there are the continuing offers related to discounts on making charges.

Retailers and shoppers, however, are waiting for gold prices to retreat to under $1,950 or under levels for some buying activity to restart. The belief is such a level would find favour with tourists, though not necessarily with resident buyers.