After the UAE residents’ shopping spree during the Diwali festival, retail demand for gold jewellery among tourists and locals in the country has stalled due to prices surging to $1,770 an ounce levels within the past few days.
It became apparent that residents and tourist shoppers are hesitating to take the plunge and prefer to postpone jewellery purchases until better times, according to the vice-chairman of Malabar Gold & Diamonds, Abdul Salam KP.
“From Dh184.50 a gram earlier this month to Dh201 right now for 22K has certainly brought out the caution in consumers. Even tourist buyers are hesitating because of this quite unexpected jump,” he said.
UAE residents had already acquired a hefty volume of gold during the Diwali/Dhanteras week around October 24. At that time, gold prices hovered around Dh187 levels, which was sufficient to set off the biggest round of gold sales in three years. Some retailers suggested it was even better than two years ago, despite Dubai Gold Rate during Diwali 2019 being at Dh172.
Retailers were perplexed by how unexpectedly the gold prices have skyrocketed within the timeframe of only three to five days, as the lowest rate for bullion in recent weeks was around $1,624. In comparison, gold during Diwali last year was around 204 a gram and in 2020 at Dh215.
Retailers speculate it would take much more than special promotions or discounts to lure shoppers back. Nevertheless, the hope lingers, that visitors flocking to the UAE to later head off to Qatar for the Fifa World Cup 2022 might save the day.
How weddings can revive sales
On the plus side, wedding-related sales will still happen, but retailers might discover the value of these could be diminishing.
Dubai’s reputation as the honey spot for sumptuous weddings has been a bonanza for jewellery and luxury label sales in the UAE. This indicates that much of the wedding-associated jewellery buying occurs here.
