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Shoppers in Dubai temporarily cut back on gold and jewelry purchases after the precious metal hit a one-year high this week and topped $2,000 an ounce.
Dubai-based gold and jewelery retailers said UAE residents mostly held their gold holdings and would not sell them even after gold hit a record high, as they expected further rises in interest rates.
Also, retailers are betting on Eid and Akshaya Tritiya festivals to boost sales.
The precious metal topped $2,020 an ounce on Wednesday, its highest level in a year.
Gold was trading at $2,007.79 an ounce Friday morning, down 0.63%. In the UAE, 24K prices settled at Dh242.75 per gram on Thursday, while 22K, 21K and 18K were traded at Dh224.75, Dh217.5 and Dh186.5 per gram respectively.
Shamlal Ahamed, managing director of international operations at Malabar Gold & Diamonds, said despite the rise in gold prices in the market over the past few weeks, there has been no subsequent increase in customers looking to sell gold jewelry.
“There has been a slowdown in customer buying, but this is expected to be short-lived as the auspicious occasions of Eid and Akshaya Tritiya are approaching, which is expected to reignite the buying trend,” Ahmad said.
Ramesh Kalyanaraman, executive director of Kalyan Jewelers, said Akshaya Tritiya is still pre-booking despite the temporary drop in discretionary gold purchases amid continued rising gold prices.
“We’re also hopeful about the upcoming festive and wedding season, and have already launched new collections and kicked off our campaigns.”
John Paul Alukkas, managing director of international operations at Joyalukkas Jewelery, said there was a slight increase in customers coming to sell or exchange gold and jewelry, however, there were also many customers coming to buy gold and jewelry and prices were expected to soar further. “Business is actually a little bit more active than usual,” he said.
Hold up to 20% of your assets in gold
As gold is considered a safe haven during times of uncertainty and volatility, Alukkas recommends that UAE residents and investors hold at least 10-20% of their total assets in gold as a hedge against inflation and diversification.
With the long-term uptrend intact, it would be unwise to sell gold or jewelry now for temporary profits, he said.
“Based on the current geopolitical and economic uncertainty at the micro and macro levels, you can expect some volatility in gold prices. Right now, we have a lot of customers coming in to buy gold and jewelry and they expect further price increases,” he said.
Ramesh Kalyanaraman said that apart from gold jewellery, consumer preference for alternative metals such as platinum, rose gold, white gold and luxury items such as diamond jewellery, has risen significantly.
“This shift is being driven by factors such as minimalism, cultural trends and the growing popularity of Four Seasons jewelry.”
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