The precious metal hit a record high yesterday prompting further consternation among jewellers across the country.
Record price dulls appetites for gold
Gold hit a record high yesterday prompting further consternation among jewellers across the country. At Cara Jewellers in Dubai, the manager Kiran Pethani offers gold in 24-carat, 1 kilogramme bars. "If you like, I can sell you [one]. $41,000." Mr Pethani's asking price is only a fraction above the world market gold price, which hit US$1,270.40 per troy ounce yesterday. His profit margin is very small but sales of the precious metal are thin on the ground. "Nobody takes the gold," he said. "For the last six months, nobody's touching it. People are buying gifts … but they don't want to waste their money."
Around the world, jewellers and traders are suffering similarly. The price of the yellow metal has increased about 16 per cent this year on fears of further economic turbulence. Gold is traditionally seen as a safe haven by investors. Markets took fright yesterday after the Japanese central bank intervened in currency markets to devalue the yen, the strength of which was said to be threatening the competitiveness of Japan's export-driven economy.
After the sale by the Bank of Japan (BoJ), the yen fell to about 83.38 yen per US dollar. On the back of the BoJ's currency sales, GFMS, a London-based metals research group, said the price of gold could rise as high as $1,350 an ounce on world markets within a year. But for shoppers, who are tightening their belts in the aftermath of the worst recession in decades, the higher price of gold has meant a change in habits.
"No more bling bling," said Hemant Karamchandani, the manager of Passion Jewellers. "It's like Dubai has lost its charm. You see people come up looking at the small, small stuff." However, he said his business was seeing a large amount of trade from people selling jewellery, predominantly women from the UK. At the Gold and Diamond Park in Dubai yesterday afternoon, Jane Dillon was one of few people buying gold.
Ms Dillon, an accountant from Australia, who lives in Dubai, bought a pair of gold earrings. "They were expensive but you always compare it to what you pay at home - it's still that price differential that makes it. They were about a third of what you'd pay back in Australia." Meanwhile, the Emirates Palace in Abu Dhabi appeared to be bucking the trend, reporting brisk trade from its gold bar vending machine despite the record price. "You can see the queues," a spokesman said.
However, other metals are gaining ground as the jewellery of choice. Platinum is one of them, becoming more popular for wedding bands. "It's a very up and coming metal," said Mr Karamchandani, "much appreciated, like a white gold." The spot price of platinum has risen 6.35 per cent over the past 30 days, hitting a high of $1,589 an ounce on Tuesday.
Mr Karamchandani said diamonds were also becoming more popular. "People are getting more and more educated on the diamond trade, now they come with technical preparation." @Email:firstname.lastname@example.org