Friday, Jan 04, 2008
Dubai: Record high gold prices will not drive retail jewellery sales down in Dubai in the long run, people in the industry said on Thursday.
They insisted consumers would eventually get used to paying more for their purchases.
"People who bought gold in the past must be happy now. Usually it takes about two weeks for people to get used to higher prices," World Gold Council's Middle East managing director Moaz Barakat said.
Spot gold touched a record high of $865 per ounce yesterday.
The Dubai Gold and Jewellery Group (DGJG) believes that the impact of price volatility is usually short-lived.
Opinion
"No matter what the price is, when it settles down people just get used to it," DGJG chairman and Damas jewellery group managing director Tawhid Abdullah said.
He said high prices do not "really affect sales in the long-term," but volatility drives consumer spending down in the short term.
Haji Mohammad Rafiq, vice-chairman of Dubai's Al Ghurair Giga gold refinery, expects the metal to continue to derive strength from the dollar's weakness.
Gold price could rise further this year as the dollar's troubles will not go away until the US elections are over and the new White House occupant provides indications of changes in the US policy that has been in "just one direction", he said, referring to the Iraq problem.
The gold industry expects the price to reach $900 per ounce this year, breaking the price record of $875 set in 1979 in the wake of the Soviet invasion of Afghanistan. Rafiq does not fully share gold retailers' view that jewellery sales will not be affected by high gold prices.
"Retail jewellery sales in Dubai will slow down but overall trade will increase," he said.
Tourism and population
Rising tourism and population growth have helped both the value and volume of gold trade in the emirate.
"Last's year's population increase has been good for sales and we recorded a 20 per cent increase in the quality sold," said Joy Alukkas, managing director of jewellery firm Joy Alukkas.
According to Barakat, tourist arrivals are boosting gold sales in Dubai as most visitors find local prices cheaper than those in their own countries and this will sustain sales.
DGJG, which includes most large companies, estimated the city's gold sales were Dh26 billion in 2007, 16 per cent higher than in 2006.
High price volatility resulted in the lowest sales growth for the city's gold retailers in the third-quarter last year.
Gulf News 2008. All rights reserved.
