Dubai: Gold prices have dropped near $70 an ounce in just 4 days – but UAE’s jewellery retailers are just not relying on this alone as the Dubai Shopping Festival and other end-of-year promotions gather momentum.
Instead, this time, jewelers are emphasizing one message over and over again – that the making charges for gold and jewellery in the UAE is the lowest anywhere in the world.
The reason why retailers are doing so is straight-forward, gold prices remain at extremely high levels for a majority of shoppers despite the recent drop by $70. Bullion is currently trading at $2,653 an ounce, while the UAE gold rate for a gram of 22K is Dh297. (The highest in the last 10 days has been Dh303 a gram. For more updates on currency and gold, check out this link.)
“Shoppers need reassurance because the price of gold has seen a more than $300 an ounce increase in just the last 6 months based on today’s price,” said Shamlal Ahmed, Managing Director – International Operations at Malabar Gold & Diamonds. “So, UAE jewelers need to speak louder about the cost benefits they can pass on to shoppers. And that’s making charges.
“Even on imported jewellery from, say, India, the UAE retail price would still be lower than where those pieces are actually made, whether that’s Kolkata or Rajkot. In most other countries, import duties on jewellery are high, and even at 21% in a market like India.
“The duty for the same in the UAE? Just 5%.” (Bullion imports have 0% import charges in UAE.)
This emphasis on making charges also has to do with more shoppers treating gold as an out and out investment. In such cases, they want to be reassured they are buying an asset that comes with no hidden costs. And making labour charges as transparent as possible is the best solution, UAE jewellers say.
It's a fact that even imported gold jewellery often costs less in Dubai or UAE than in the places that actually made them
Recently, there had been some campaigns, especially in India, that gold prices are actually lower in that market compared to what is the case in the UAE, Qatar or Oman. These were patently wrong, but UAE retailers say it did manage to confuse many Indian tourists at the time.
All eyes on DSF gold raffles
The DSF 2024 has started, and the gold related sales promotions have been given an extra layer of significance given that this is the 30th year of the annual event. And the daily gold raffle draws have been a major contributor to raising the profile of the shopping event.
Shoppers spending Dh1,500 or more on jewellery at participating outlets get a chance to win their share in the Dh1.5 million jackpot. Each week, 1 kilogram of gold will be given away in raffle draws, with 20 winners receiving a quarter kilogram each. (Weekly draws are scheduled on December December 16, 23, 30 and January 6 and 12 January.)
“Dubai has always had the best gold prices because of how the making charges are set,” said Tawhod Abdullah, Chairman of Dubai Jewellery Group and CEO of Jawhara Jewellery.
“The making charges are now between Dh3 a gram to Dh30 a gram, and it’s for the shopper to decide what suits him best. What Dubai’s gold trade can offer is the most competitive labour charges anywhere in the world.
“It’s no different from a price of a cup of tea – here, you can spend Dh1.5 or, if that’s what you fancy, even Dh300.”
Are shoppers getting the message?
Based on retailers’ feedback, it’s been a relatively slow start to the DSF promotions when it comes to gold sales. But they expect a significant pick up to happen over the next 2 weeks and even up to January 15, if gold prices remain soft. Or better still, drop even further.
“The heavy tourist spending should kick in from December 20 or so,” said Ahmed. “The flights from India will be running full and that’s always a good sign for UAE jewelers.
It's up to the shopper to decide whether they want to buy gold jewellery with a making charge of Dh3 a gram or Dh30. Whatever be the case, labour costs on gold are lowest in Dubai
“What’s interesting is that the UAE market is starting to see more American tourists spending on gold, specifically going for 50 gram, 100 gram and even 1 ounce bars. And on these purchases, they benefit from 0% VAT. We can expect more Western visitor demand closer to January 1.
“If the UAE gold markets widens its appeal to more shoppers, everyone benefits.”
