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Sales of gold jewellery across stores in Dubai improved in recent weeks from the record low volumes seen earlier, thanks to the beginning of the festival season, said the chairman of Dubai Gold and Jewellery Group (DGJG).
The onset of the festivals season, particularly for Asian consumers, coupled with the recent decline in bullion prices, has led to an uptick in demand, Tawhid Abdullah, chairman of DGJG, told Zawya.
With Diwali (Indian festival of lights) coming up later this week, many Indians will prefer to buy gold and other precious metals as it is considered auspicious on Dhanteras, which falls on this Friday.
“Consumers are venturing into jewellery buying once again. We have been seeing [the] momentum in the market since September,” said Abdullah, who also serves as the managing director of Jawhara Jewellery, which has more than 50 shops across the country as of 2018.
“The festival season is a driving factor, especially for the resident population. Diwali is one of the important festive seasons for Asians,” he added.
Gold Jewellery consumption worldwide plummeted during the second quarter of 2020 due to the coronavirus pandemic and high prices.
Overall, demand for jewellery remained weak across the Middle Eastern markets during the third quarter, according to the World Gold Council, and this was mainly due to the repatriation of Asian expatriates, decline in visitor traffic and low oil prices.
“Weak energy prices and the outflow of Indian expats added to the damaging combination of collapsing tourism and historically high gold prices,” the World Gold Council said.
The UAE and Iran led the downturn, with losses of 30 percent and 34 percent, respectively, while in Saudi Arabia, the increase in VAT proved to be an additional obstacle to demand, which fell 24 percent year-on-year to 7.2 tonnes during the third quarter.
However, Abdullah said, sales in Dubai started to pick up around September on the back of festival-related purchases and easing of gold prices.
Spot gold had eased to as low as $1,861.67 an ounce in September after hitting more than $2,000 an ounce a month earlier.
“Consumers respond to decline in price much faster,” said Abdullah.
He said they’re betting on the uptrend to continue in December, as well as early January, as restrictions continue to ease and more visitors arrive in the UAE.
“We hope that we will see a rise in the demand for jewellery [in the coming months]. With improved inbound and outbound travel, we expect an increase in footfall and sales,” he said.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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© ZAWYA 2020
