UAE gold shoppers want more discounts on jewellery making charges

Dubai: UAE gold shoppers are once again getting straight discounts – of 25% and more - on making charges as the Dubai gold price sticks to Dh376 a gram for 22K.

In fact, one leading gold retailer – Kalyan - is even having a ‘double discount’ campaign as the cost of gold becomes the main factor in gold jewellery sales. Apart from a 25% discount on making charges, Kalyan is offering another 25% off on purchases of Dh7,500 plus.

According to industry sources, leading jewellery brands are planning ‘new season’ promotions keeping in mind that gold prices are on the high side – and could be heading even higher.  This time, the promotions will focus even more on making charges as a percentage of the jewellery’s pricing.

“In 9 out of 10 cases, the shopper is asking us whether there is a discount on making charges,” said a gold retailer. “If we are not offering a discount, we risk losing that sale. There is no point trying to tell shoppers that the making charges are the margins for jewellers to operate a successful business.

“They will go to the next jewellery retailer and get a discount.”

One thing is for sure, the traditional way of selling gold and jewellery in the UAE and Gulf markets will change.

These days, there is demand generated only when there are sizable price drops or during promotions such as the Eid sales, December’s holiday season sales, and the Indian festivals of Akshaya Trithiya and Dhanteras.

This is clearly seen in recent data of UAE and Saudi jewellery demand, which have fallen significantly according to the World Gold Council. It means that the peak gold sales periods in the UAE are getting shorter, and that means less cash flow for businesses big and small.

So far, no jeweller has spoken about reducing the number of stores or reducing staff counts. But the worry is there that if sales keep dropping, what else they can do. Some retailers speak about how some of their new collections had tepid responses because of the high price of gold.  

UAE shoppers are not convinced by retailers’ saying that they should buy now because gold prices are only heading higher. “That argument does not carry weight – because if shoppers are going to spend Dh376 and making charges now, it still burns a hole in their pockets now,” said a retailer.

Early today, gold prices surged to $3,385 an ounce levels after US President took aim at Fed official Lisa Cook. It has now settled back to $3,370 levels, but expect the volatility to continue on the upside.

Analysts expect gold to head back to $3,400 or thereabouts once the US goes for a September interest rate cut.

As for gold shoppers, "There is nothing to suggest that prices are going to go down," said a jeweller. "If Dubai gold price is heading back to Dh380 a gram for 22K levels, it will be the biggest blow for the new sales season from September."