25 September 2008
MUSCAT -- The demand for gold will never be in doubt as long as women, and of course some men too, are fascinated with the glitter of the precious metal. Even as gold becomes more attractive as an investment option, the fascination for gold jewellery coupled with rising disposable income would mean more sales in jewellery shops.
The price of gold in the recent months has continued to be volatile with economies across the globe witnessing inflationary pressures but this has not deterred the customers in the Sultanate from buying or investing in gold.
The yellow metal has in fact, points out Rajesh Govindan, country manager, Damas LLC, created a remarkable niche for itself in the market. "This year's gold import to Oman has increased by 50 per cent compared to last year," he says.
To trace the gold price fluctuation story to the last six months, on April 1, 2008 if the rate per gram for 22ct gold was RO10.550, on May 1 it came down to RO10.150, on June 1 it stood at RO10.450, on July 1 it further rose to RO11.150, while on August 1 it was RO10.900 but on September 1 it slumped to RO9.850.
In fact, September 18 saw the largest one day rise since February 1980 when gold suddenly surged to RO10.550 per gram. It was around RO8.950 the previous day (as we are going to press, the price of gold was RO10.500 per gram for 22ct.)
"In the last few weeks, we have seen huge ups and downs in the price of gold. Buyers are obviously watching closely and taking maximum advantage of the price fluctuation in the market.
"Our sales figures in different branches across the AGCC hit the top bracket while the gold rate came down to RO8.950 recently. The gold price has again seen a rise but our sales continue to be good," explained Jose K.F., regional manager, Joyalukkas Jewellery LLC.
Leading jewellers in Oman say that despite the fluctuation in prices, consumers are continuing to spend money on gold. "This underlines the optimistic attitude of consumers, and indicates that, whether the price is up or down, the demand for gold remains robust."
"To sum up our experience with regard to gold price fluctuation, I can say that it has not affected sales. We have noticed that the rise in price itself has added to the demand as many people buy gold as an investment," explains Jose.
"At the same time a sudden fall also helps, as most buyers capitalise on the lower price," he adds.
Shaju George, regional manager, Atlas Jewellery LLC, too agrees that whether the price touched a new low, or a new high, or climbed up or down in the recent weeks, it has not resulted in a normal buyers' slump.
"This has not dimmed the interest of the customer of the yellow metal. The psyche of the consumer remains quite unchanged about buying gold/jewellery. People know that the price keeps increasing every year, and so it is a great metal to make a good investment," he explains.
Jose points out that when the rate fell sharply last month, the demand for gold coins and gold bars was more as people find an investment in its liquidity.
"We noticed people were comfortable making bulk purchases too," he says.
Even the World Gold Council experts say investors in gold are taking solace from a growing body of research supporting gold's reputation as a protector of wealth against the ravages of inflation.
"Market cycles come and go, but extensive research from a range of economists has demonstrated that, over the long term, through both inflationary and deflationary periods, gold has consistently maintained its purchasing power," they explain.
The World Gold Council outlook for the third quarter in 2008 also remains optimistic.
"While the sense of economic or financial crisis lasts, gold investment demand will continue to be robust, although high prices are likely to generate a certain amount of profit taking. Under these circumstances, jewellery demand is likely to remain subdued in some countries. Nevertheless, despite the adverse impact of rising food and energy prices on household budgets, the potential for stronger jewellery demand remains, once prices stabilise sufficiently to regenerate consumer purchasing in those countries sensitive to price volatility," a World Gold Council report said.
But will the price stabilise soon?
"It is difficult to predict," says George.
"Since the price of gold is interlinked with several factors, nobody can predict. It will take time to stabilise. It might be around RO11 for sometime," George adds.
Rajesh Govindan, country manager, Damas LLC says, "I don't see any reason why the price should stabilise as it all depends on global economy, which is not stable. Gold is high in demand and people always tend to buy this precious metal.
But according Jose the rate will not stabilise soon. "But consumer spending on gold will not decline as they prefer the metal for safer investments," he says.
The demand for gold is widely spread around the world. East Asia, India and the Middle East account for 72 per cent of world demand. Each market is driven by a different set of socio-economic and cultural factors. The festival season sees a surge in buying in the Middle East and India. Jewellers in Oman are optimistic about the sales during Eid and Diwali.
"It is natural that people buy more during festive season," says Rajesh.
"We make the highest sales during the festival season. During Eid for instance, buyers don't pay attention to the price factor. They buy to celebrate and give gifts. We are expecting comparatively better sale this Eid too," says Jose.
A customer buying at one of the jewellers explained that post September has been a traditionally gold buying season for them.
"We buy during this time every year. The price is of course a factor but we consider this an auspicious time to buy gold," explained Hema.
"Also, I feel gold is going to be costing more soon. In fact, within three to six months it will be much higher. So, ideally, let's buy now when it is lower than three months later," she added.
Shaju says the season has been good for the jewellery industry since Onam (a festival celebrated by Malayalees). "We saw a lot of sales for Onam and expect very good sales for Eid, Diwali and other festivals."
Atlas jewellery is in fact running a promotion sale where with every purchase of RO20 the customers stand to win a car.
"This promotion has been attracting a lot of customers too," George explained.
Gold continues to be cherished and remains the most sought-after precious metal in Oman. "Hope in and out of jewellery shops for just a week and you will notice most of the jewellery shops here are perpetually packed with customers ," concludes a jeweller.
MUSCAT -- The demand for gold will never be in doubt as long as women, and of course some men too, are fascinated with the glitter of the precious metal. Even as gold becomes more attractive as an investment option, the fascination for gold jewellery coupled with rising disposable income would mean more sales in jewellery shops.
The price of gold in the recent months has continued to be volatile with economies across the globe witnessing inflationary pressures but this has not deterred the customers in the Sultanate from buying or investing in gold.
The yellow metal has in fact, points out Rajesh Govindan, country manager, Damas LLC, created a remarkable niche for itself in the market. "This year's gold import to Oman has increased by 50 per cent compared to last year," he says.
To trace the gold price fluctuation story to the last six months, on April 1, 2008 if the rate per gram for 22ct gold was RO10.550, on May 1 it came down to RO10.150, on June 1 it stood at RO10.450, on July 1 it further rose to RO11.150, while on August 1 it was RO10.900 but on September 1 it slumped to RO9.850.
In fact, September 18 saw the largest one day rise since February 1980 when gold suddenly surged to RO10.550 per gram. It was around RO8.950 the previous day (as we are going to press, the price of gold was RO10.500 per gram for 22ct.)
"In the last few weeks, we have seen huge ups and downs in the price of gold. Buyers are obviously watching closely and taking maximum advantage of the price fluctuation in the market.
"Our sales figures in different branches across the AGCC hit the top bracket while the gold rate came down to RO8.950 recently. The gold price has again seen a rise but our sales continue to be good," explained Jose K.F., regional manager, Joyalukkas Jewellery LLC.
Leading jewellers in Oman say that despite the fluctuation in prices, consumers are continuing to spend money on gold. "This underlines the optimistic attitude of consumers, and indicates that, whether the price is up or down, the demand for gold remains robust."
"To sum up our experience with regard to gold price fluctuation, I can say that it has not affected sales. We have noticed that the rise in price itself has added to the demand as many people buy gold as an investment," explains Jose.
"At the same time a sudden fall also helps, as most buyers capitalise on the lower price," he adds.
Shaju George, regional manager, Atlas Jewellery LLC, too agrees that whether the price touched a new low, or a new high, or climbed up or down in the recent weeks, it has not resulted in a normal buyers' slump.
"This has not dimmed the interest of the customer of the yellow metal. The psyche of the consumer remains quite unchanged about buying gold/jewellery. People know that the price keeps increasing every year, and so it is a great metal to make a good investment," he explains.
Jose points out that when the rate fell sharply last month, the demand for gold coins and gold bars was more as people find an investment in its liquidity.
"We noticed people were comfortable making bulk purchases too," he says.
Even the World Gold Council experts say investors in gold are taking solace from a growing body of research supporting gold's reputation as a protector of wealth against the ravages of inflation.
"Market cycles come and go, but extensive research from a range of economists has demonstrated that, over the long term, through both inflationary and deflationary periods, gold has consistently maintained its purchasing power," they explain.
The World Gold Council outlook for the third quarter in 2008 also remains optimistic.
"While the sense of economic or financial crisis lasts, gold investment demand will continue to be robust, although high prices are likely to generate a certain amount of profit taking. Under these circumstances, jewellery demand is likely to remain subdued in some countries. Nevertheless, despite the adverse impact of rising food and energy prices on household budgets, the potential for stronger jewellery demand remains, once prices stabilise sufficiently to regenerate consumer purchasing in those countries sensitive to price volatility," a World Gold Council report said.
But will the price stabilise soon?
"It is difficult to predict," says George.
"Since the price of gold is interlinked with several factors, nobody can predict. It will take time to stabilise. It might be around RO11 for sometime," George adds.
Rajesh Govindan, country manager, Damas LLC says, "I don't see any reason why the price should stabilise as it all depends on global economy, which is not stable. Gold is high in demand and people always tend to buy this precious metal.
But according Jose the rate will not stabilise soon. "But consumer spending on gold will not decline as they prefer the metal for safer investments," he says.
The demand for gold is widely spread around the world. East Asia, India and the Middle East account for 72 per cent of world demand. Each market is driven by a different set of socio-economic and cultural factors. The festival season sees a surge in buying in the Middle East and India. Jewellers in Oman are optimistic about the sales during Eid and Diwali.
"It is natural that people buy more during festive season," says Rajesh.
"We make the highest sales during the festival season. During Eid for instance, buyers don't pay attention to the price factor. They buy to celebrate and give gifts. We are expecting comparatively better sale this Eid too," says Jose.
A customer buying at one of the jewellers explained that post September has been a traditionally gold buying season for them.
"We buy during this time every year. The price is of course a factor but we consider this an auspicious time to buy gold," explained Hema.
"Also, I feel gold is going to be costing more soon. In fact, within three to six months it will be much higher. So, ideally, let's buy now when it is lower than three months later," she added.
Shaju says the season has been good for the jewellery industry since Onam (a festival celebrated by Malayalees). "We saw a lot of sales for Onam and expect very good sales for Eid, Diwali and other festivals."
Atlas jewellery is in fact running a promotion sale where with every purchase of RO20 the customers stand to win a car.
"This promotion has been attracting a lot of customers too," George explained.
Gold continues to be cherished and remains the most sought-after precious metal in Oman. "Hope in and out of jewellery shops for just a week and you will notice most of the jewellery shops here are perpetually packed with customers ," concludes a jeweller.
By Mrudu Naik
© Times of Oman 2008
