Saturday, Mar 28, 2009
Gulf News
Although many see gold as a safe haven during volatile times, sales of gold jewellery have recently taken a mild hit in Dubai as the credit crunch continues to bite into consumers' pockets.
Demand for gold has dropped because consumers are becoming more conscious of their spending and tourist levels are falling, according to a former World Gold Council (WGC) official.
"Currently, the market is very depressed in volumes... Figures point to 30 to 40 per cent reduction. The reasons for this drop are of course that buyers in Dubai have become more cautious about spending money as they have lost their jobs, are afraid of losing their jobs or have lost a lot of money in investments during the last few months," said Rolf Schneebeli, economic adviser for gold firm ARY.
"The arrival of tourists from abroad has also dramatically reduced and hence there is less buying from this side as well. But in any case, it is clear that the class worst hit so far in the crisis is the high-rolling and big-spending new rich, rather than the traditional gold-saving class from the Middle East and the Indian subcontinent," added Schneebeli, who used to head the WGC.
The preferences of those who still have cash to spare, however, remain unchanged. Buyers still go for bangles, plain gold pieces and coins. Although the making charges in Dubai might be higher than elsewhere in the region, Schneebeli said jewellery here is known for its quality.
"The price range is also quite attractive. For a 22-karat bangle, the client might end up paying Dh6 or Dh7 per gram in making charges. Depending on global demand for certain coins or bars, this is absolutely in the range of such bangles and highlights the characteristics of these pieces as an investment."
Last year, Dh13.7 billion worth of gold jewellery was cleared from jewellers' shelves in the UAE, up 17 per cent from Dh11.4 billion in sales recorded in 2007. After India and China, the Middle East is the third largest market for gold globally, accounting for 10 per cent of world demand.
Tommy Joseph, general manager for marketing and business development at Joyalukkas Group, said demand for gold jewellery still looks pretty stable, although there has been some weakness in sales. "Customers are still buying gold jewellery because currently gold is considered as the safest investment. Sales of gold jewellery are showing a mild fluctuation due to the unsteady gold prices, but overall, the demand is pretty stable as compared to last year," Joseph said.
Gulf News 2009. All rights reserved.
