All that glitters is not gold
The regulations in India have hurt Dubai’s gold trade hard
Click here to add Cyriac Varghese as an alert
Disable alert for Cyriac Varghese,
Click here to add Dubai as an alert
Disable alert for Dubai,
Click here to add Gerhard Schubert as an alert
Disable alert for Gerhard Schubert,
Click here to add Jewellery Group as an alert
Disable alert for Jewellery Group,
Click here to add Kaloti Jewellery Group as an alert
Disable alert for Kaloti Jewellery Group,
Click here to add Shamlal Ahmad as an alert
Disable alert for Shamlal Ahmad,
Click here to add Sky Jewellery as an alert
Disable alert for Sky Jewellery,
Click here to add Tarek El Mdaka as an alert
Disable alert for Tarek El Mdaka,
Click here to add US Federal Reserve as an alert
Disable alert for US Federal Reserve
Dubai’s gold and jewellery retail could get a timely boost ahead of the Indian festive buying season in November if India’s authorities finally agree to raise the value and weightage of gold brought into the country by individuals. Gold sales in the November to January period traditionally represent between 30 to 40 per cent of annual sales for the local trade here, retailers say.
The local jewellery trade had taken a sizeable hit by at least 30 per cent over the last three months after India raised the import duty on gold to 4 per cent from 1 per cent earlier. To make matters worse for jewellery retailers here, India’s customs also started to strictly impose duties on Indian passengers bringing in gold valued at more than Rs10,000 (Dh700 plus) by men and Rs20,000 (Dh1,700) for women. (Incidentally, these values stem from a 1967 import duty regulation when gold prices were $35 an ounce. Prices now hover at $1,700 plus currently.)
Jewellery trade sources here now say they are hopeful of a pullback by the Indian authorities on the import restrictions, more so because of the recent reform policies reinitiated by the government.
“Several representations have been made to the Indian authorities for a review of this archaic policy and come up with something that is more in sync with present day gold prices and the demand patterns,” said Shamlal Ahmad, managing Director of international operations at Malabar Gold & Diamonds. “We are hopeful that some changes would be made ahead of the Diwali period in November if not it will extend the downtime the local jewellery retail has been having.”
For Dubai’s gold trade, the regulations in India have hurt them hard. That is also why this category has been the weakest performing within Dubai’s broader retail sector this year, while other categories such as fashion, automotive and food and beverages have been growing in high double-digits.
Indian shoppers are the dominant category when it comes to 22-karat gold and jewellery, while Arab buyers prefer 21-karat and it is 18-karat for Western expats and tourists. Of the 22-karat jewellery bought here, more than 70 per cent of it is destined for India at some point or the other.
With India raising the import duty to 4 per cent, the cost advantage that Indian residents had when buying gold here as opposed to in India has also been reduced significantly.
“There are concerns among buyers here as to the harassment from customs officials at Indian airports over the gold they bring in,” said Cyriac Varghese, general manager at Sky Jewellery. “The same doubts exist for Indian tourists thinking of buying gold here and unless a solution is found we don’t see any rationale for the Dubai Gold and Jewellery Group mounting a roadshow in India ahead of the next Dubai Shopping Festival.”
But beyond the local retail space, there is a general bullishness for the yellow metal. “The monetary stimulus by major central banks especially the Fed’s open-ended quantitative easing the continuing turmoil in European economy, the Chinese economy slowdown and central banks’ gold buying has caused an eruption in demand for physical gold,” said Tarek El Mdaka, managing director at Kaloti Jewellery Group. He believes gold to scale between $1,750 to $1,800 an ounce this quarter.
Similar upbeat sentiments are voiced by banking sources. “Physical buying has been encouraging and strong, without influencing the spot market prices in a significant way,” said Gerhard Schubert, head of precious metals at Emirates NBD. “However, the buying has been consistent and that might be on-going, at least for the next few weeks, along with Diwali and that is followed by the traditional Christmas buying in large parts of the world.”
With Diwali related buying a fortnight away, Dubai’s jewellery trade is certainly hoping this is the case.
- So cool it's hot: Saudi Arabia's $3.2B HVACR market driven by construction boom
- Oman sees steady upswing in fishing industry
- Breathe easier with LG Saudi Arabia’s new indoor ventilation system
- Careem offers discounts to riders headed to the gym!
- Widespread apple crop failure raises agricultural concerns in Lebanon
- Dubai to go for gold and 'boost the UAE's economy'
- India’s gold duty hikes is to Dubai’s advantage
- All that glitters is gold: Salma Rashid shows off her new gold iPhone!
- All that glitters is diamonds at Al Liali this summer!
- Emaar Malls Group awards winners with glittering prizes during Dubai Summer Surprises