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UAE: Shoppers cut back on gold jewellery purchases as price stays above $2,000

Residents not selling gold assets, expecting rates to go up further

Published: Fri 7 Apr 2023, 7:16 AM

Updated: Fri 7 Apr 2023, 1:08 PM

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Shoppers in Dubai have cut back temporarily on gold and jewellery purchases after precious metal hit a one-year high and crossed $2,000 an ounce this week.

Gold jewellery retailers in Dubai said UAE residents are mostly holding onto their gold assets and not selling even after the yellow metal hit a record high, as they expect rates to go up further.

In addition, the retailers are betting on Eid Al Fitr and Akshaya Tritiya festivals for improvement in sales.

The precious metal prices crossed $2,020 an ounce on Wednesday, the highest in the past year.

On Friday morning, gold was trading at $,2,007.79 an ounce, down 0.63 per cent. In the UAE, the 24K price closed at Dh242.75 per gram on Thursday while 22K, 21K and 18K were trading at Dh224.75, Dh217.5 and Dh186.5 per gram, respectively.

Shamlal Ahamed, managing director for international operations, Malabar Gold & Diamonds, said even though the market has experienced an increase in gold rate over the past few weeks, there hasn’t been a subsequent uptick in customers wanting to sell gold jewellery.

“There has been a slowdown in customer purchases, but this is expected to be short-lived as Eid and the auspicious occasion of Akshaya Tritiya is around the corner, which will hopefully reignite buying tendency,” said Ahamed.

Ramesh Kalyanaraman, executive director, Kalyan Jewellers, said though the consistent increase in the gold price has seen a temporary dip in discretionary gold purchases, there is advance booking for the Akshaya Tritiya.

“We are also hopeful about the upcoming festive and wedding season and have lined up fresh collections and started our campaigns around the same.”

John Paul Alukkas, managing director for international operations at Joyalukkas Jewellery, said there has been a slight uptick in customers who are coming in to sell or exchange their gold and jewellery, however, there are also many customers who are coming in to buy gold and jewellery anticipating a further spike in prices. “In fact, business has been slightly brisker than usual,” he said.

Hold up to 20% of assets in gold

Since gold is considered a safe haven during uncertainty and turmoil, Alukkas advised UAE residents and investors to hold at least 10-20 per cent of total assets in yellow metal to hedge against inflation as well as for diversifying investments.

He said it would be unwise to sell gold or jewellery now for the sake of temporary profit as the long-term upward trend is intact.

“Based on the current geopolitical and economic uncertainties at both the micro and macro levels, you can expect some volatility in the price of gold. Currently, we have many customers who are coming in to buy gold and jewellery anticipating a further spike in prices,” he said.

Ramesh Kalyanaraman said apart from yellow gold jewellery, there has been a notable uptick in consumer preferences towards alternative metals such as platinum, rose gold, white gold as well as luxury products such as diamond jewellery.

“This shift is fuelled by various factors such as minimalism, cultural trends and growing popularity of all-season jewellery.”

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