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All that is glittering right now is gold!

By Mrudu Naik Muscat: Gold yesterday soared to a record RO19 per gram (over $1,600 per ounce) for 22 carat.

This is the first time gold prices have surged to this level, with investors buying the 'safe-haven metal' amid deepening debt worries in the Euro zone and the United States as well.
Just a week ago - on Monday, July 11 to be precise - gold prices stood at RO18.400 per gram for 22 carat.

To give a comparative view, in May 2010, the rate per gram for 22ct gold stood at around RO14.300.

Joy Alukkas, chairman of Joyalukkas Group , said, "Gold prices have been consistently fluctuating for a long time now because of various factors. I guess people believe in the long-term investment aspect of gold. However, every big price jump has some effect on our sales, but this lasts for a short period only.

Customers come out and buy again when they get some sort of stability in the price because they know the price is likely to jump again soon."

Alukkas added, "As jewellery retailers, we are also strongly affected by the price of gold but in the long run it evens out and we are able to maintain a steady growth in gold jewellery sales. Buyers are clear on the dual appeal of gold jewellery, i.e. the fashion statement aspect of it and the investment value of it.

"There is no single method to counter the fluctuation of gold jewellery prices because it's very difficult for retailers to finance extra frills when this is the case. However since we look at our customers from a long term perspective we try and give them various schemes and offers to try and absorb the impact of price jump as much as possible. Some of the offers we have are low making charges, exchange of old gold for new etc," he explained.

"Ultimately, gold is an ideal combination of 'status symbol and investment', so a very sensible buy for customers," Alukkas averred.

"This is an all time record and it's (prices) expected to go even higher in the next few days," a jeweller from a well known jewellery store predicted. However, the buyer in Oman is not discouraged by the price increases, say most of the jewellers.
"In fact, we always register more sales when the prices go up.

Customers tend to believe that if they buy today, it will constitute an unimaginable bargain next year," he said
Jewellers in Oman registered high sales during the Akshaya Tritiya, which fell on May 6. "Customers made considerable gold purchases during the period," said a jeweller from Ruwi.

Most expatriates, especially Indians, buy gold while going for the annual vacation. However, small time jewellers have been feeling the pinch for a long time now.

A Muttrah based jeweller said, "Since most of our buyers are from the lower income group we are hit by the soaring prices. Not many buyers turn up these days. The branded outlets are luckier." But then even this jeweller believes things would be better during the Eid festival in September. "Both Eid Al Fitr and Eid Al Adha are a significant gold buying occasions in this part of the world," he said.

The World Gold Council , in its Q2 2011, reports that gold outperformed most major assets, including commodities. In addition, gold's low average volatility of 13.4 per cent for the quarter is well below its long-term 20-year average of 15.8 per cent.

© Times of Oman 2011