In a turnaround caused by high global prices jewellers in the UAE are buying gold from customers instead of selling.
Record high gold prices hit jewellers in the UAE
Jewellers countrywide are buying gold from customers instead of selling it to them as the price of the precious metal hits an all-time high.
As the yellow metal traded above US$1,500 yesterday, jewellers were buying scrap gold such as old rings and bracelets from customers seeking to cash in on the boom, which has also sent the price of diamonds and silver soaring.
Silver has risen by more than 150 per cent in the past year, hitting a fresh 31-year-high yesterday as it traded above $46 an ounce.
Average diamond prices have risen to $9,426 from $9,138 a month ago, according to the Rapaport Diamond Trade Index which is based on the top 25 best quality 1 carat diamonds.
Many shoppers at the Gold Centre at Madinat Zayed Shopping Centre in Abu Dhabi yesterday were looking to sell their unwanted gold. Nabil Rana, a salesman at Faiza Jewellery, said sales of gold jewellery had declined by half. "Business is bad. The price is too high," he said.
"Customers are selling gold but there is only Dh15 (US$4), Dh20 or Dh100 of profit for us in that."
Gold has grown more attractive to investors amid mounting concern over the strength of the US economy and the threat of a sovereign debt crisis in the world's largest economy.
That has sent the dollar tumbling to its weakest against the euro in 16 months.
When the dollar wanes, investors often turn to the yellow metal as an alternative safe haven. The greenback's weakness has been blamed on the US Federal Reserve's campaign to bolster its economy through quantitative easing. Excess money pumped into the financial system has been sucked into gold and other commodities, driving up prices.
Jewellers have been forced to rapidly adapt their businesses in the face of sharply rising commodities markets that have also sent the price of base metals such as lead, zinc and copper up.
Fatima Ahmed, 32, from Abu Dhabi was among the people at the Gold Centre yesterday looking for a good price for three rings, a necklace and some bracelets. She said the high price of gold was one of the reasons for selling her old jewellery that she no longer needed.
Mohammed Shafi, a sales assistant at Al Awadhi Jewellery in Abu Dhabi, said the business had suffered a 60 per cent decline in sales of jewellery, but a 70 per cent rise in customers selling scrap gold.
"Nobody is coming to buy. Everyone wants to sell their gold," he said.
A sales assistant at another jeweller in the Madinat gold centre, who asked not to be named, said the business he worked for was also suffering.
"This is the highest price in my 25 years of service and it's affecting us a lot," he said.
"Customers are buying if they are in need, like if they are going to a wedding, otherwise nobody wants to buy gold. Most jewellers are suffering."
Yaghoub Amrollah of Chelsy Jewellery was offering customers Dh130 per gram of 18-carat gold yesterday while 24-carat gold was fetching Dh174 a gram.
While surging prices kept many buyers away from jewellery shops yesterday, some people were still browsing for presents intended for loved ones.
Noora Amr, 30, who lives in Abu Dhabi, was at the gold centre to buy jewellery, but not for herself.
"I'm here to buy something for my Mum's birthday," she said.
"I don't buy like before. The price is too high. The last time I bought something for myself was maybe a year ago."