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UAE: Why is everyone buying gold despite record-high prices?

Huge crowds and busy shops were seen all across the country as people flocked to buy the yellow metal

Published: Mon 4 Dec 2023, 3:04 PM

Updated: Tue 5 Dec 2023, 9:11 AM

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Despite record-high prices, gold shops around the UAE have seen a spike in business. Huge crowds and busy shops were seen all across the country as people flocked to buy the yellow metal.

According to experts, one of the main reason why there has been an increase in sales is because of the expectation that prices will go higher. “We have seen a notable spike in sales in the recent past,” said Nishin Thaslim, Chairman of Nishka Jewelry.

“A significant contributing factor has been the rising trend of gold prices. The market dynamics, including an upward trajectory in gold prices, have created increased demand for our products. We have observed a slight decrease in the weights purchased whereas a drastic increase in the walk in customers. As investors and consumers seek to capitalize on the favourable market conditions, our offerings, which include gold-related products, have experienced heightened interest.”

On Friday, gold hit $2,075 an ounce, and remained on track to soar towards an all-time high, around the $2,079-2,080 zone set in May.

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Suresh Babu, General Manager at Zaiba Jewellers said that the company had seen increased sales across all its outlets in Dubai. He agreed that expectations of higher prices were one of the main driving factors for people to buy. “Experts say that prices could go up to $2400,” he said. “Usually towards the end of December, we see price spikes. So we are expecting that trend to continue. There might be some minor corrections in the short term but we do think the price will continue on an upward curve.”

According to Shamlal Ahamed, managing director – international operations, Malabar Gold & Diamonds, this upward trend will continue despite the possibility of a correction. "The price of gold has broken a significant milestone," he said. "Investors find solace in gold as a safe haven. There might be a correction before the new year, but we expect the gold price to be higher in the coming weeks.

Tourist sales

Suresh pointed out that high sales is also due a higher number of tourists in the country. “Usually at this time of the year with improved weather, we see a lot of tourists coming to the country,” he said. “We have seen an influx of tourists coming into our shops as well.”

This was also observed by Rahul Sagar, Vice President of Shantilal Jewellers, who said their store has seen strong retail sales post Diwali. “I think many Indian tourists are back in Dubai, which is a great sign,” he said. “This time of the year is always busy as many tourists from around the world prefer to visit Dubai in December, with the weather being more pleasant at this time of the year. We’re definitely happy to see many tourists here in the Gold Souk again.”

He said they were expecting the strong performance to continue. “We expect to see stronger demand for jewellery, particularly from all the visitors that are expected to touchdown in Dubai over the next few weeks,” he said. “With the Dubai Shopping Festival commencing this Friday, we hope it will provide an additional boost in sales so that we can end the year on a high.”

Nishin echoed this sentiment. “We are particularly optimistic about the impact of the upcoming Dubai Shopping Festival,” he said. “DSF has historically been a major driver of consumer activity, attracting a diverse and international audience.Given the festival's reputation for offering exclusive deals, promotions, and a unique shopping experience, we anticipate a surge in consumer interest and demand during this period.”

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