Dubai Gold
Dubai’s Gold Souq. Gold posted a second straight weekly decline that trimmed this year’s rally to 18 per cent but is still the best performer on an index of 22 raw materials. Image Credit: Gulf News Archives

After a year that saw sluggish gold sales in the UAE following the introduction of value-added tax (VAT), jewellers are breathing a sigh of relief; they say there is an upward trend in the market ahead of Eid and the summer season.

UAE-based jewellers said there are several reasons for the change of heart. Speaking to I, Joy Alukkas, chairman and managing director of jewellery chain Joyalukkas Group, said: “We have seen our pre-Eid sales volumes go up 15-18 per cent compared to last year. A major reason for this is that people have got accustomed to paying VAT. Last year when VAT was introduced, it was a new concept for gold buyers and they viewed it as an additional cost, therefore, [they] refrained from buying the yellow metal. But that has changed now. And people are once again showing faith in gold and diamond purchases.”

Customers select gold bracelets at a shop in the Dubai Gold Souq. India’s demand also boosted sales in the UAE’s gold market, a key source for the Indian market. Image Credit: Megan Hirons Mahon/Gulf News Archive

Another reason for the positive sentiment is that the government has announced a waiver of VAT on gold purchases for international visitors. And while the number of transit buyers have taken a nosedive due to the recent grounding of Jet Airways' international flights to the UAE, global scarcity of reliable investment choices mean people - especially South Asians - are still keen on the honeyed metal.

Joy Alukkas is chairman and managing director of one of the biggest jewellery chains in the UAE Image Credit: Virendra Saklani / Gulf News

Alukkas said his jewellery chain has introduced an Eid and summer promotion called “Golden Summer Surprise”. “We have timed it around Eid as people are increasingly looking at buying gold and diamond during this time. Buyers will have the chance to win up to 200 gold bars. They will also be gifted a free gold coin on purchase of diamond and polki jewellery.”

Shoppers who buy Dh500 worth of gold jewellery will be entitled to one raffle coupon. Those buying Dh500 worth of diamond jewellery will get two. Besides this, with every Dh3,000 worth diamond, polki and pearl jewellery purchase, shoppers will get a one gram 22k gold coin free.

The offer is valid until August 17.

Abdul Salam KP, group executive director of Malabar Group, also noted a 10 to 15 per cent increase in gold sales volume. “Despite the gold price shooting up on Friday (May 31), we saw an increase in sales volumes. I foresee prices to go up further, [but] of course that depends on global sentiments and the geo-political situation.”

Abdul Salam KP Malabar Gold 30122018
Abdul Salam KP, Group Executive Director for Malabar Gold and Diamonds Image Credit: Supplied

“We [have seen] a rise in sales since Akshaya Triti. Our pre-Eid sales [are] definitely looking brighter than last year. The consumer sentiment is positive. Another point in consideration is that South Asians view gold as an investment. With the global scenario not looking very positive with respect to certain investments, gold seems to be picking the interest of shoppers once again.”

KP added that the group will be offering special prices on its pendant collections on its various gift items.

Anil Dhanak, managing director of Kanz Jewels, said the VAT refund for international tourists announced by the UAE government in November last year, has positively impacted retail jewellery outlets based in Dubai Gold Souq.

“Since last November, we have seen a 15 per cent increase in gold sales volume in the country,” said Dhanak.

Anil Dhanak, Managing Director of Kanz Jewellers recently set up Kanz Films to make mid-budget Bollywood fare. Image Credit: Virendra Saklani/Gulf News

“For us 75 per cent of our customers are international tourists, including [from] the GCC. The rest are from the UAE. The gold rate jumped 2 per cent on Friday, marking the highest gain the last seven weeks. The share market is down and in such a scenario, gold becomes a preferred choice of investment especially among Asians.”

He predicted gold rates would climb further in the coming weeks, owing to global sentiments.

Karim Merchant, Group CEO of Pure Gold, said the market is not back to pre-VAT trends. “The sentiment has definitely improved but we are not there yet. This weekend, (May 31 and June 1) we saw a spike in our sales volumes despite the gold price shooting up. Volumes are up 7 per cent in comparison to the weekend before Eid last year.”

He added his special edition collection for Ramadan is being picked up by shoppers. “It is a calligraphy allay pendant with gold and diamond. Price range of this is from Dh899 to Dh1,299. Gifting is a big trend during Eid and we are offering special prices on these products.”

Karim Merchant
Karim Merchant, group ceo, Pure Gold Image Credit: SUPPLIED

“We expect the gold price to remain steady, maybe a slight increase, but nothing too volatile unless there are geo-political reasons impacting [it].”

Pure Gold is confident of its offering; it says the firm's gold and diamonds offers are unmatched in the market. “In fact, we have an offer for customers wherein if they find a jewellery piece with the same weight of gold and diamond elsewhere in the market for a cheaper price, we will refund double the difference amount as loyalty points so they can collect it and encash it in the near future,” said Merchant.

I guess gold is still sparkling.