Gold stock shopping Dubai
Gold and jewellery buying in the UAE has been subdued through the first-half of 2022, except for some spikes during January and the first week of May, during 'Akshaya Trithiya'. Image Credit: Gulf News Archive

Dubai: UAE gold retailers have launched a series of promotions hoping to pick up last-minute buying before residents fly home for summer. Rather than straight discounts, the typical offer provides free gold coins if the buying crosses a certain level on gold or diamond jewellery purchases.

The idea is that shoppers will be convinced by the relatively softer gold prices and the fact that currency values have dropped against the dirham/dollar in their own countries in recent weeks. “Whether it’s the Indian or Pakistan rupees, they are at or near all-time lows against the dollar,” said a gold retailer. “Buying gold in the UAE thus offers the benefit of currency advantage for expats here.”

Early on Monday (June 27), one advantage that these retailers are hoping has receded. Gold had closed Friday last in the mid-$1,820s for an ounce. Today, the price is firming up at $1,838 as news filter through about the US and others putting ban Russian gold exports.

“Any time there is a shortage created on any commodity supplies will raise prices,” said a commodity analyst. “Gold is just the latest to feel the impact of Russia-Ukraine.”

The closing Dubai Gold Rate on Sunday was Dh207.75 a gram for 22K, but will likely see an increase when the first one for Monday is set. In fact, the Dh207.75 is the lowest 22K has been in the last 10 days.

Limited buying

Since late February, when the Ukraine conflict started, gold had broken through $2,000 an ounce and then stuck to high $1,800s or above $1,900 levels. There were brief phases during these months when it seemed that gold would drop to around $1,800 – but that never happened. Even after the US Federal Reserve raised interest rates by 0.75 per cent this month, gold actually firmed up.

“The last four months have seen limited gold shopping appetite among UAE residents, and it was the same with tourists,” said a jewellery retailer. “It wasn’t that long ago gold prices were in the $1,800-$1,820 range, and shoppers are not still ready to pay higher than that.”

The last time gold dropped below $1,800 this year was late January.

India, Pakistan gold rates
Ahead of Monday's market opening, the price of gold in:

India is at Rs4,900 for one gram;

Pakistan is at PKR10,649 for one gram.

Will Summer promotions work?

That would depend on whether shoppers expect to derive major price benefits from buying here and selling in their home country. This is where the ‘free gold coins’ can help, retailers say. “Everything that’s been happening to gold in the last two years reinforces its ‘safe haven’ status,” said the retailer. “Summer is always a difficult time for gold demand from residents, because they have the spending for airfare, holidays and everything to account for. And for families, the spending on school immediately on their return.

“The current gold promotions are targeted at those shoppers who have some funds left over – this is where the ‘free’ gold coins can help.”