Many UAE investors are selling gold coins, bars in jewellery shops
Gold owners are turning into sellers to take advantage of higher prices
Image used for illustrative purpose. Shopkeeper sits in his shop in Dubai gold souk.
REUTERS/Tamara Abdul Hadi
By Cleofe Maceda, ZAWYA
Buyers of gold jewellery may have taken a break at a time when prices continue to skyrocket, but the metal itself seems as popular as ever.
When gold prices recently touched a seven-year high of $1700 per ounce, a growing number of residents began to sell gold coins and bars, pocketing close to $4.08 to 5.45 per gram of gold.
But who are these dealers of gold? Zawya has learnt that most of them are expatriates from India, Lebanon and Egypt who accumulated bars and coins as an investment while the prices were still very low.
Kuber Jewellery which buys and sells gold at its Dubai Gold Souk shop, used to get about five to 10 phone calls from retail investors planning to sell their gold holdings.
“That was a few months ago. These days, I get 15 to 25 calls from potential sellers. More people are selling their gold right now compared to the previous months,” a source at Kuber Jewellery told Zawya.
“If you book your profit today, you will earn about 15 to 20 UAE dirhams per gram on gold bought at the same time last year,” the source said.
Gold has seen its value surge over the past few weeks, hitting a seven-year high of $1,703 on Monday before retreating to $1,656.37 on Wednesday. In the UAE, the retail price of 24-karat and 18-karat gold stood at $54.86 (201.50 UAE dirhams) and $42.13 per gram, respectively.
High safe-haven demand among investors amid soaring coronavirus cases has pushed the value of gold higher. The latest emergency interest rate cut of 50 basis points by the United States Federal Reserve on March 3 also provided more support for the yellow metal.
Jewellery shops in the UAE had earlier confirmed that they are witnessing a huge decline in demand due to rising gold prices, with sales dropping by 15 percent to 20 percent.
However, Karim Merchant, group CEO and managing director of Pure Gold Jewellers, said their shops haven’t seen a large number of people selling their gold. He said the majority of the customers are still waiting for the prices to appreciate further.
“We are seeing customers take a ‘wait and [see]’ approach as, at the moment, the price of gold is volatile,” Merchant told Zawya.
“Customers are holding onto their gold in hopes of the gold price going higher, so for now we are seeing a status quo,” he added.
A sales associate at another jewellery shop in Dubai Gold Souk noted that they are seeing both buyers and sellers come through their doors, with most of the traffic driven by tourists.
“We do see people selling their gold, although some of them do so in order to make new purchases for a special occasion, such as a wedding,” the salesperson said.
“I see people selling their jewellery but only because they need the money. Jewellery owners don’t usually make huge profits during a resale because of the high making charges,” he said.
The global demand for gold bars and coins dropped 20 percent year-on-year to 870.6 tonnes in 2019, the lowest level since 2009, according to the World Gold Council.
(Reporting by Cleofe Maceda; editing by Seban Scaria)
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