The price of 22K gold has increased from Dh161 at the end of July 2019 to Dh222 by end of last month, about a 37 per cent increase year-on-year. Small value purchasers are holding off their buying decisions as they wait for prices to normalise and economic conditions to improve.
Egyptian national Sara Hakim said: "I buy some gold at least every year around this time. This year I was looking for a small pendant for my daughter. But I feel prices are quite high. There is no harm in waiting to see if prices will drop further. Why pay more for something, when I can get it cheaper. I'll go a few more jewellery stores around the weekend to check for any further discounts?"
Indian resident Zoya Shaikh said: "Some jewellery stores in the city have announced a festival discount of up to 70 per cent on diamond, polki and pearl jewellery. I will definitely go with my husband to the store this [weekend] and hopefully I'll buy something. I also need to buy a few gifts for my family whenever I meet them next. So, this might just be the perfect time to buy some gold or other precious jewellery."
Gold remains safe haven
But individuals with considerable disposable income and greater purchasing power are still active in the market.
Mr Shamlal Ahamed, Managing Director -International Operations Malabar Gold& Diamonds says, "Consistent performance of gold as an appreciating and mobile asset has led to individuals with excess cash reserves beginning to acquire gold. Hence, there has been an increase in customer footfall over the last few weekends and we expect the same to continue this weekend as well."
Experts aver it is the ease to liquidate the yellow metal for cash without losing much value during these difficult times that further increases its dependability.
While all other assets like currency, oil, stock markets and real estate have steeply declined in value, gold has seen a sharp appreciation in sync with the uncertainties prevailing in the broader economy.
Karim F. Merchant, Group CEO & MD, Pure Gold Jewellers says, "We are seeing better demand from the local and Arab Expat population versus Asian expat. Gold will always be gold, there will be uncertainty due to wars, pandemic and economic cycles but gold has always proved to be a safe heaven and a protector! We expect gold to continue to reach new price level in the medium terms."
Echoing similar sentiments and forecasting the trend of for the precious metal, John Paul Alukkas, Executive Director, Joyalukkas Group says, "While diamond and platinum are able competitors, gold still remains on top of the market and is in the highest demand.
It's a stable asset, an important portfolio diversifier, easy to liquidate and holds a certain unmatched traditional and sentimental value among families. We have every reason to believe that gold prices will be on the path of a steady, stable rise which makes it a safe haven for investors."
Reflecting on the shifting trends among the gifting patterns among the younger generation, Arjun Dhanak, Director, Kanz Jewels says,
"Gold as always is showing more interest even with the price rising as there is understandably a perception that it holds more value than diamonds or platinum. At the same time diamond jewellery is increasingly popular amongst the millennials as it is seen as a reasonable price point for gifting."
Chirag Vora - Director - Bafleh Jewellers, says, "there is general sense of uncertainty. Customer footfall has increased due to hike in gold price. Gold seems to be going higher in prices throughout this year and 2021."
Central banks increase their bullion stock
As per the data published by the World Gold Council, many Central Banks have continued to invest in gold and have increased their holdings in the last 3-9 months. Central Banks of India, Turkey, UA and Russia to name a few, have made substantial investments to increase their gold reserves.
Turkey has increased their gold holdings by 109 per cent to 805.9 tons and UAE has increased their holdings by 104 per cent to 31.5 tons. India purchased 47 tons and Russia purchased 60 tons to increase their total holdings to 665 tons and 2,301 tons respectively.
Prominent investment bank Goldman Sachs has forecasted its three, six and twelve month gold prices to be $1800, $1900 and $2000 per ounce respectively, following the economic uncertainty caused by the coronavirus crisis. We also expect this upward trend for gold price to continue.
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