UAE strikes gold with this new demographic buying the precious metal in Dubai
Arabs living in non-GCC countries-particularly Syrians and Egyptians are the most avid buyers of gold in the UAE since the start of 2014 (File Archive)
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Dubai’s jewellery trade is striking a rich vein of demand from a relatively new shopper demographic – the (non-GCC) Arab – during the ongoing Dubai Shopping Festival (DSF) sales cycle. The increased buying activity from this consumer base — both resident and visitors — is also translating into higher value purchases on their part, market sources say.
“There is a clear spike in gold and jewellery related purchases from non-GCC Arab shoppers — and particularly Syrians, Iranians or Egyptians — in recent weeks, a trend which first became evident in November but since January 2 is becoming quite significant,” said Shamlal Ahmad, director of international operations at Malabar Gold.
“The impression is that these shoppers are buying into gold as a sort of defensive asset against social or economic uncertainties in their home countries. In particular, they are going for 22-carat which was never their preference earlier.”
The Arab Spring and the events since had gone on to benefit Dubai’s economy across multiple layers, with its real estate being a prime beneficiary. Now, it seems, one of the key categories in Dubai’s retail sector — gold and jewellery — is on the cusp of a major gain from the Arab asset purchase flow.
Last year was a roller-coaster one for the gold market here, the first five months proved exceptionally strong but in the second-half it was a more subdued affair. Shoppers were put off by gold price’s sharp decline and did not want to be seen buying when there was every chance that it could drop further.
The fourth quarter of 2013 was particularly testing. But, now, with gold prices seeming to have settled in at the $1,200 an ounce mark, buyers are heading back to the shops. Since January 2, when DSF 2014 opened, outlets in Dubai have been recording daily sales of 200kg and over.
“The market has rebounded strongly from the lows that were seen during the last weeks of 2014,” said Sunny Chittilappilly, chairman of Dubai Gold & Jewellery Group. “The bull run is expected to continue over the next few weeks. While this can be attributed to a large extent on the DSF promotion, I feel that customers in Dubai are very strongly disposed towards buying gold.”
Ahmad says improved sentiments are clearly reflected in the increased use of credit cards to fund transactions. “In the last 10 days or so, there is a shift towards credit card led purchases where earlier cash was favoured,” said Ahmad. “What this does is that shoppers are willing to go in for higher value purchases per transaction and mirrors consumer confidence. There is a clear improvement from what it was in November or December.”
By Manoj Nair
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