x Abu Dhabi, UAETuesday 25 July 2017

Ramadan gold sales weighed down by high bullion price

The holy month and Eid are typically big seasons for gold sales, but the high price deterred consumers from their festival-related buying.

Retailers say UAE gold sales have fallen as the price of bullion stays above $1,000
Retailers say UAE gold sales have fallen as the price of bullion stays above $1,000

Ramadan and Eid al Fitr did not trigger the usual surge of gold sales in Dubai and Abu Dhabi, retailers say, mainly due to the stubbornly high price of the precious metal. Firoz Merchant, the chairman and founder of Pure Gold jewellers, said sales were down 50 per cent last month across his stores in the UAE, as the price surged beyond the $1,000 per ounce mark. "Price is very important," he said. "If the mark settles between $500 and $700 (per ounce), then you will see reasonable buying. Otherwise, it won't happen." The holy month and Eid are typically big seasons for gold sales, but the high price deterred consumers from their festival-related buying, retailers say. The spot price of gold was $997.23 on Friday, far from $695.40 per troy ounce in October of the past year. Mr Merchant said while overall jewellery sales were between 10 and 20 per cent above last year, gold sales took the biggest hit due to price and as consumers shift towards diamond jewellery whose prices have not risen. Tushar Patni, a member of the Abu Dhabi Gold and Jewellery Group and owner of Ajanta Jewellers, said last month's sales in the capital were down by much as 60 per cent, compared with last year. "Ramadan has always been a good season for purchasing. But this year it hasn't been good," he said. "The whole of Ramadan went by without any action." High prices were the main culprit, but residents returning from their summer holidays to face school fees and other expenses were also a deterrent, he said. Anan Fakhreddin, the World Gold Council's managing director of Middle East and Turkey (CK), however said gold demand is stabilising as people adjust to the new, higher, gold price. The demand for gold in the UAE was down by 19 per cent in the second quarter, up from a 31 per cent drop in demand during the previous quarter. Official figures for the third quarter were not yet available. However, he said, it would be difficult to reach the peaks of the third quarter last year. "After the second quarter of 2008 was the peak of the local demand for gold, just before the downturn and the recession started hitting the world and the region," Mr Fakhreddin said. Chandu Siroya, the vice chairman of the Dubai Gold and Jewellery Group, said last month's sales in Dubai were down 20 to 25 per cent below the same period last year. Chetan Karani, the managing director of Pearl Enterprises, said gold sales were down by 30 per cent last month at their stores in Abu Dhabi. Again, the main deterrent was the high gold price, he said. "For the gold jeweller, it's quite an important festival and they should have done well." Tomy Joseph, the general manager at the Dubai-based jeweller Joy Alukkas, said sales in the past month were down by 25 per cent its Dubai stores, and down 5 per cent in Abu Dhabi, compared with the same time last year. He too said the decline stemmed from a high gold price. However, he was optimistic for the coming month, and the upcoming Diwali season, another traditionally big sales period. Mr Fakhreddin said he expected sales to improve with the local wedding season, Eid al Adha, and other celebrations. "We still have the most important occasions ahead of us," he said. "I think quarter four will show the beginning of the improvement and hopefully that will lead us into 2010." The World Gold Council is also trying to counter the negative effects of the fluctuating gold price by developing brands tailored to the region's consumer, to encourage people to buy based on jewellery design, rather than as a commodity, said Mr Fakhreddin. "Brands normally bring loyalty with them and I think the lack of brands that we have now is one of the major reasons why we the demand is so elastic with price." The World Gold Council has boosted its budget in the Middle East and Turkey by roughly 20 per cent to develop these new brands. It is conducting consumer research and working with local trade partners to create and manufacture the new lines. It will be releasing its first brand in November, which will be sold at Damas stores in the UAE and Lazurde in Saudi Arabia, Mr Fakhreddin said. "Our ultimate objective now is basically to cultivate the evolution of these brands, hoping this will increase the level of consumer engagement that we have on the ground, and moving away from a commoditised product." aligaya@thenational.ae