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DUBAI: UAE gold shoppers didn’t get the price drop they had hoped for. According to market sources, this is affecting overall sales in the local gold and jewelry industry, making it the worst-performing retail category in the first half of 2023.
Clearly, current levels of gold — today’s $1,919 an ounce and 22K at AED214.5 a gram — are sapping consumer demand. Even the traditional peak in demand ahead of summer travel has so far failed to materialize, gold retailers say.
“Since gold prices dropped to the $1,905 level on Thursday (June 29), things have improved and people are looking to buy something for Eid,” a retailer said. “But many are waiting for prices to fall further on Friday. , but they will be disappointed that the price actually shot up to $1,919.
“UAE gold prices have risen by AED1.75 per gram in this 24-hour period, while shoppers expect prices to fall.
“In the first six months, the average customer spend has dropped significantly. Shoppers don’t seem to be used to prices above Dh210 per gram.”
This all happened within a week as gold prices fell to 3-month lows and were even on track to break below $1,900, which was last seen at the end of March when gold was trading at the $1,815 level. That’s exactly what got potential shoppers and retailers excited last Thursday — with prices set to drop to levels around $1,850 an ounce, helping to refresh demand. (Throughout Eid, however, Gulf tourists, especially Saudi tourists, to the UAE were busy buying gold.)
everything costs more
Retailers are still hoping they can spur some demand for gold ahead of the peak summer travel season. Even here, they may be disappointed. Airfares are back to pre-pandemic levels, eating into shoppers’ budgets for discretionary spending on items like gold.
Also, shoppers are showing some fatigue. “They just don’t want to buy gold when it’s so high and then have to see it go down a few weeks later,” said one retail analyst. “Gold needs to stabilize at a certain level to convince shoppers. Not satisfied with being told that prices will rise further in the future.
Customers of Malabar Gold Corporation in the Dubai Gold Souk.
Credit: Ahmed Ramzan/Gulf News
Consumers are buying
They may appear wary of gold, but UAE consumers are sure to spend this summer on fashion, travel, cars, restaurant outings and home holidays. Overall consumer sentiment is upbeat, with retail sources saying the latest Dubai summer surprises are off to a good start.
It is expected that the price will further seesaw
Gold prices will remain range-bound this month and ahead of the Federal Reserve’s July 25-26 meeting, which may or may not raise rates before its summer recess. (In June, the Fed decided to hit the pause button.)
Not only that, discussions of a possible recession in some major economies have also resumed. Recessions tend to be good for gold prices – up.
Gold retailers pull out all the stops
To stimulate some demand, UAE gold and jewelery retailers are offering all the options – cashback, fee discounts, price locks and sweepstakes. The final point – there is no price loss when you trade in an old product for a new one.
That’s still what residents continue to do — trade. Whether it’s gold coins, bars, or jewelry, they’re all in exchange for something new. This has become a standard reaction among UAE gold consumers to break the Dh210 per gram price level and beyond.
Expect them to do more of the same.
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