Dubai: Shops will display an “official” gold price on electronic screens in Dubai starting from early 2016, authorities said.
The Department of Economic Department (DED) and the Dubai Gold and Jewellery Group (DGJG), whose members have at least 1,000 shops, have agreed to install the display units.
The displayed price will be updated in line with international gold price movements and the initiative will help customers make purchases without the fear of being cheated, DED said.
The display units will be centrally controlled so all participating shops will show the same price. In the first phase, 500 shops of DGJG members will install the units, eventually reaching 1,000 shops.
Non-member shops that do not have the units will eventually feel compelled to quote the same price because customers will expect to encounter the same price no matter where they shop, said Tawhid Abdullah, Chairman, DGJG.
Also, shops will not be allowed to charge customers paying by credit card a 2.5 per cent fee over and above the display price, added Mohammad Lootah, Executive Director, Commercial Compliance & Consumer Protection, DED.
The display price will have already included a three to five per cent retail markup over the international gold price. The display price, taken as an average, will be updated four times a day to reflect market trading in different regions.
The international gold price is based on the supply and demand of gold, which is traded as a commodity in international commodity markets, Abdullah said. The price varies in individual countries because of the local charges and costs associated with gold.
Dubai has the lowest gold prices because the local charges and costs associated with gold are so low. Fierce competition also helps keep prices low.
The “Dubai gold price” set by DGJG on the units will be updated at 9am, 2pm, 5pm and 8pm. DED will monitor the display price and ensure it is within the three to five per cent markup from the international price.
Any price collapse or sudden hike will be take into account and reflected on the screen, Lootah said. Under normal trading, a five per cent “buffer” on the international price is fair to both shops and customers, he added.
“If shops want to sell below the display price, it is up to them. It is good for the customer and we always welcome everything that is good for the customer,” Lootah said.
The display units will operate on a secure GSM network to provide “the most updated prices without any chance of manipulation by jewellers. It will also help tourists understand the gold price in local currency and reassure them that what they see is the official price followed by jewellers across Dubai,” DED said.
Retail members will have to pay a service charge to renew the service annually.
Lootah added in a statement that the DGJG “was established with the support of the DED and we have continued our partnership to cement Dubai’s reputation as the City of Gold. Considering the number of retail gold outlets in Dubai and the volatility of gold as a commodity, uniform pricing and transparency are critical to keeping Dubai as the most competitive and attractive gold market.”
Abdullah said though the introduction of the display units will be new, Dubai shops have been following the practice of transparency and low prices for 21 years. “I think we will be followed by other emirates. The screen will be the referee for the consumer.”
Lootah added that DED is also weighing up a proposal to mention the craftsman or making charges on the purchase receipt. Customers will know how much of the purchase price is because of the gold price itself and how much is because of the making charges.
“If someone wants to pay a lot for the making charges, because the jewellery is special to them, it’s their call,” Abdullah said.