Dh200 drop and pent-up drive: Why are UAE shoppers getting back into gold after 10 months?

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Dh200 drop and pent-up drive: Why are UAE shoppers getting back into gold after 10 months?

Gold buying in November had to do with something much more than spending during Diwali

Published: November 27, 2020 07:02 Manoj Nair, Business Editor , Devadasan K P, Picture Editor and Photographs by Antonin Kelian Kallouche

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Stock Dubai Gold 1 — In November, UAE shoppers finally decided they were not going to sit on the sidelines any longer when it came to gold and diamond jewellery. And by November 14, they had done their bit to make up slightly for what has been the most difficult year ever for the local jewellery trade. They were ready to make November a ‘festival of gold’. Image Credit: Antonin Kelian Kallouche/Gulf News

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Stock Gold Dubai jewellery — What brought on this sudden demand? Sure, there was the Indian festival of Diwali that’s usually one of the peak seasons for buying jewellery. But this year, the buying in November had to do with something much more than spending during a festival. It was as if shoppers were intent on making a statement - that they are back. Image Credit: Antonin Kelian Kallouche/Gulf News

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Stock - Dubai Gold — Along with the overall demand increase, the average transaction size also shot up since the start of the month. “Against Dh2,000-Dh2,500, an average transaction was pushing past Dh3,500,” said Abdul Salam K.P., Executive Director at Malabar Gold & Diamonds. “There was a lot of deferred buying that’s happening now.” Image Credit: Antonin Kelian Kallouche/Gulf News

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Stock - Dubai Gold 2 — Price drops helped - after the August 6 all-time high of $2,070 an ounce, gold is now at more “realistic” levels of $1,809/$1,810. In dirham terms, shoppers are getting comfortable with Dh206 a gram for 22K after dropping down from plus Dh230 levels in August. Image Credit: Antonin Kelian Kallouche/Gulf News

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Stock - Dubai Gold — All that UAE shoppers wanted was some stability to return to gold prices - and now they seem to be getting it. The US elections are out of the way, talk about a COVID-19 vaccine is gaining traction, and investors are willing to get back into other assets and not just into gold This explains, partially, why gold prices have softened from August levels. "The price has come to be at a more acceptable level due to the US election and vaccine news," said Anil Dhanak of Kanz Jewels. "The vaccine factor will continue to play a major role." Image Credit: Antonin Kelian Kallouche/Gulf News Archive

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Stock - Dubai Gold — More than 80 per cent of the buying of gold and diamonds happening in the UAE now are from residents. And diamond jewellery too made a strong comeback this month - "People were in a mood to buy and this is probably due to the fact that there was no travel," said Vinay Jethwani of Meena Jewellers. "And since many couldn't spend on purchases abroad, they must have ended up buying here." Image Credit: Antonin Kelian Kallouch/Gulf News

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Stock - Dubai Gold — Will a strong November showing continue over the next few weeks? The DSF season starts early this year, and that should help mop up some of the residual domestic demand. As long as prices do not shoot up further, shoppers may be in the mood for a late year spending. Jewellery retailers will bring back the promotions during DSF, and they will continue to offer lower making charges to induce some last-minute buying. Image Credit: Antonin Kelian Kallouche/Gulf News

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Stock - Dubai Gold 1 — But it’s when the Saudi visitors start returning that the UAE jewellery trade will get its next big boost. The Kingdom now has 15 per cent VAT on retail transactions, and that’s eaten into already weak gold demand there. “Once travel movements return to normal, a lot of the Saudi buying for jewellery will happen in the UAE itself,” said Salam. Image Credit: Antonin Kelian Kallouch/Gulf News

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1.2154091-744982653 — Jewellers are noticing more first-time gold shoppers making an appearance. “The younger crowd is clearly paying more attention as they see value in buying assets that appreciate with time,” said Dhanak. “They are shedding their inhibitions in seeing gold as purely decorative.” Image Credit: Gulf News Archive

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Dubai - Stock Gold 1 — Bars and coins have managed to hold shopper interest for the better part of this year, as gold reinforced its status as the go-to asset when every other asset is seeing a slide. Image Credit: Gulf News

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Meena Jewellers — But the biggest surprise in November was the extent of buying happening around jewellery. Shoppers put off their save-first mentality and indulged in some fairly sizable buys. "This season, the overall jewellery sale was good - in fact, very good," said Vinay Jethwani of Meena Jewellers. Image Credit: Clint Egbert/Gulf News

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Stock - Dubai Gold 1 — Shoppers were clearly in the mood, with Malabar Gold & Diamonds selling this particular set for Dh129,000 and making it the costliest transaction it had in the UAE during Diwali week. A few of these and more will put the cheer back into the jewellery trade. Diwali sure had an extra sparkle this year. Image Credit: Gulf News

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Stock - Dubai Gold 1 — Will UAE's shoppers then return for more? Or was the demand during Diwali an exception? But this year proved there is no denying gold's power... and of diamonds too. Image Credit: Antonin Kelian Kallouche/Gulf News

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