UAE: Residents, tourists throng gold shops as prices fall

Gold traders report a steep demand hike for the precious metal as prices decline. Some retailers are reporting a 20 per cent hike in demand following the price fall, Eid Al Adha and the summer holidays and the pent-up market after the pandemic.

Most buyers are UAE residents, tourists, and transit passengers en route US, Canada, and the UK, said Joy Alukkas, chairman and managing director of his namesake jewellery brand. He said, “Most shoppers purchase gold jewellery for use and investment. The trends of people purchasing bars from our stores are not as much.”

Gold prices fell more than Dh2 per gram in the UAE on Thursday morning, trading close to a one-year low. The Dubai Gold and Jewellery Group data showed 24K trading at Dh205.0 per gram on Thursday morning compared to Wednesday’s close of Dh 207.25 per gram. Prices spiked from Dh192.50 a gram for 22K to Dh194.25 on Friday.

“The Friday spike in prices did not really impact the demand, to be honest. The trend compared to last year has been extremely positive since Akshaya Tritiya (celebrated on May 3). The post-pandemic demand has been very positive,” said Alukkas.

Moreover, a majority of the buyers are people in the age group of 35 and above. “They are the decision-makers. Tourists flooding into the UAE from India are also shopping for gold,” he added. Moreover, the trends are almost immediate since residents can easily monitor prices online thanks to social media and internet penetration.

“We see the same trend in our money exchange centres as well. People take advantage of the prices almost immediately,” Alukkas explained.

Anil Dhanak, the managing director of Kanz Jewels, said, “Our retail clients are taking full advantage of these lower prices, and despite the summer heat, we are observing people willing to visit our stores and purchase jewellery.”

Dhanak said investors understand that this dip could be temporary and could see a return to the $1800s level. “Haven assets such as gold are going to be in everyone’s portfolio during these uncertain times,” he explained.

However, Dhanak said the demand for gold, especially 24k investment bars, is rising. “Even with a slight increase in the price of gold for an ounce, we are seeing a huge number of buyers enter the market to de-risk their portfolio,” he explained.

Chirag Vora, the director of Bafleh Jewellery, said, “The dip in price along with the onset of summer holidays have contributed to the sales increase. Traditionally people, especially those from the sub-continent, buy gold when they travel home for their vacation. This year the low price has been a boon for gold travellers going on their vacation, which has helped increase sales.”