Gold is still holding firm in the $1,920 an ounce an over range, and the only relief for UAE gold jewellery buyers is that prices have dropped from $2,000 plus, which was the case as recently as early March.
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The coming weeks will see Eid-related shopping in full spree, and some of that – in the best of times – would have involved gold too. Plus, there is the ‘Akshaya Trithiya’, the Indian festival where gold purchases are central to the celebrations, in the first week of May.
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Will shoppers overlook the high gold prices and go ahead with a few buys? This is where UAE’s jewellery retailers hope to make a convincing case.
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This time, big and small retailers are focusing on sharp cuts to their making charges. A couple of big names are already testing likely responses from shoppers, offering even 0 per cent making charges on ‘select 22K gold’ jewellery.
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“With the actual gold prices this high, the only option available is to cut or do away with the making charges,” said a retailer. “If shoppers can be convinced they are only paying for the weight of gold in the jewellery, they will be more willing to consider buying.”
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Typically, in the UAE, making charges are around 8-10 per cent of the gold’s value in a piece of jewellery. Retailers believe that offers based around cuts to making charges will also find favour with tourist shoppers, who because of gold prices shooting up since February 24 have not been that active.
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Theses retailers still have time to work on their Eid offers. The first two weeks of Ramadan typically represent a slow phase for any non-essential purchases, and the action starts closer to the Eid break. “Any time after April 15 will be the best time for shoppers if they want to make the best use of the offers, and which will apply to the Akshaya Trithiya promotions too,” said a retailer.
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By then, shoppers will also be hoping that gold prices drop some of the price gains brought on by the Russia-Ukraine conflict and settle under the $1,900 mark. Or will that be too much of a wishful thinking?
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Any improvement in demand for gold (and diamonds) will be welcome, after shoppers stayed well away during March. Everyone understands the value of gold and where it stands compared to other asset classes. But any shopper wanting to return to buying needs to see gold prices stabilize, preferably at a more accessible level.
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As for retailers, no one is talking about gold shooting to $2,100 for now. That’s a relief as they wait for shoppers to return. With the right sort of offers and sacrificing some of their making charges, they have made a start.
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