Jubilant jewellery traders in the "City of Gold" expect the ongoing gold rush to reach a fever pitch in the next two days as Indian expatriates celebrate the "festival of lights."
"Diwali is an important occasion for Indians and for several Indian expatriate communities here, it is an auspicious occasion to buy gold. Hence, we foresee a brisk sales season ahead," said Tawhid Abdullah, chairman of Dubai Gold & Jewellery Group.
"Price is still at affordable levels and due to the comfortable pricing of gold, we expect substantial rise in footfalls and sales this season," said Abdullah, the head of the influential jewellery traders' group. "Even when the gold price was showing a slightly upward trend recently, the retail jewellery sector in Dubai, and across the UAE has been performing up to the mark."
Asians, predominantly shoppers from Indian sub-continent, constitute the largest chunk of jewellery consumers in the UAE.
Most retailers reported that sales had jumped between 10 and 25 per cent in the run up to the festival.
Joy Alukkas, chairman and managing director, Joyalukkas Group, said most outlets have been experiencing steady sales surge across the UAE. "This could be due in part to the implementation of GST in India and the overall consumer belief in gold as a solid long-term investment. This year, various promotions have been well received by customers, and that has pushed footfalls and purchases compared to last year."
"We are expecting up to 30 per cent increase during the Diwali period. However, on the day of Danteras, we expect over 400 per cent increase in sale as compared to a normal day," said Shamlal Ahmed, managing director, international operations of Malabar Gold & Diamonds.
He said the jewellery trade has been witnessing a positive trend with the start of Diwali campaign by several outlets. "Our sales have gone up exceptionally in the run up to Diwali. This is due to the increase in the number of both residents and tourists shopping for gold and diamond jewellery. We expect this trend to continue beyond the Diwali season until January/February 2018," said Shamlal.
Kalyanaraman said the upcoming Dhanteras and Diwali season has begun on a promising note. "We expect a 10 per cent to 12 per cent increase in sales compared to last year."
He said a dip in the prices of gold (one per cent as compared to last month) and the anticipated escalation in price due to VAT could be contributing factors for the remarkable upswing in sales. "We believe that the festive season followed by the wedding season are also contributing to the demand," said Kalyanaraman.
Abdullah expects Diwali spirits to remain high this year and would translate into increased sales.
However, he believes that there is a possibility that some consumers may time their jewellery purchases around the last quarter of this year in expectation of the price hike post January 2018. "But we do not see this as a very important factor pushing up the sale for this Diwali. Jewellery sales predominately depends on the gold price, overall market sentiments and several other factors like currency exchange rates, and customs duty in various countries," said Abdullah.
Shamlal said while the jewellery trade is awaiting clarity regarding VAT and its implication on jewellery business in UAE, for buyers, the current gold price levels are attractive and they are taking advantage of it.
Alukkas said that the jewellery trade was not seeing any additional escalation in jewellery purchases based on the VAT effect in January. "The sale trends are in line with the demand we usually see during festivals like Dhanteras & Diwali. We feel the impact of VAT on jewellery prices is not going effect the demand for jewellery, since the price difference will be very nominal. There could be a small impact during the first month since some customers would like to wait and watch, however this is not expected to last long."
Mihir Kapadia, CEO and founder of Sun Global Investments, and emerging market investment expert, said Diwali and the festival season always see strong demand for gold buying in India as well as in the UAE. "This seasonal demand has been a major factor in the pattern of gold demand for at least two decades and we expect this year to be no different. However, we do not except it to boost prices significantly as the overall market is subdued due to worries about rising interest rates and rising stock markets."
With the current prices at a low and with the festive season round the corner, it is natural to expect a higher consumer demand, which should support prices, said Kapadia.
Copyright 2017 Khaleej Times. All Rights Reserved. Provided by SyndiGate Media Inc. (Syndigate.info).