When dramatic price drops make headlines, savvy shoppers, investors and 'shopper-investors' descend on Dubai's souqs to get deals when the deal-getting is good.
Gold price drop has jewellery sales booming in Dubai souqs
When dramatic price drops make headlines, savvy shoppers, investors and 'shopper-investors' descend on Dubai's souqs to get deals when the deal-getting is good. Alice Haine finds that, judging from the crowds, that time is now.
Jashan Sharma has booked an hour off work to visit the Gold Souq in Dubai's Deira area.
He asks to see a rack of necklaces because, for him, there is no time like the present to buy.
"There was too much of a drop in price so I took an hour from work to get this advantage," says the 24-year-old Indian banker who has lived in Dubai for five months.
"I've invested a few times but when the price goes down as much as this I buy. Plus, it is the festival of Navrati, a nine-day festival, so if I buy during this period the value of the gold will multiply."
Sharma turns his attention back to a rack of bright yellow-gold necklaces being proffered by the shop assistant in Kanz Jewels, a brand with six stores littered around the outdoor souq that dates back to the 1940s, when traders from Iran and India pitched their stalls along the creek.
He is not alone in his quest for gold because the shop is crammed with 40 or so buyers crowding around the glittering gold jewels on display, including a group of 21 doctors and chemists from Madras who are visiting Dubai specifically to buy the metal.
And like Sharma, nearly all have come to capitalise on gold's very shiny new price.
The precious metal's value is currently experiencing a 20-month low. When you consider gold, at US$1,379 (Dh5,065) an ounce at the time of press, has shed almost 30 per cent of its value since its peak of around $1,920 an ounce in September 2011, it is easy to understand the gold rush.
This week, panic selling continued with a drop of around $125 an ounce in one day on Monday - the biggest ever decline in dollar terms. But while the big investors are selling, the small investors are buying.
Visit the Dubai souq in the middle of the day and, unlike many of the city's malls, which are relatively empty at that time, it is teeming with tourists and residents.
As they walk along the souq's main thoroughfare, Sikkat Al Khail street, they are literally dazzled as an estimated 25 tonnes of the precious metal is on display at any one time.
Many stop at an electronic signboard to take pictures on their mobile phone of the day's gold price. The government-monitored figures are released by the Gold & Diamond Jewellery Group and help novice buyers arm themselves before they haggle for the best price.
On Tuesday this week, Dh154 would buy 1 gram of 22-carat gold, a softer, yellower and higher purity of the metal favoured by Asians, while Dh125 secured a gram of 18-carat favoured by Africans and Europeans, who prefer harder, more ornate designs.
It's thirsty work with hawkers selling fizzy drinks and water to keep customers refreshed in the early afternoon heat. But the weather does not dampen the visitors' thirst for gold.
"We came today because the price has fallen down," says Pradeep Valvi, 54, who is on a five-day holiday with his wife.
"I have bought a bangle and a ring. It's not exactly an investment; my son is 21 and he might be getting married.
"He does not have a girlfriend but we will keep it and then transfer it to him when he gets married. It is not a dowry, we just give it out of love."
Pakistani Aisha Murad, 21, is also buying gold as a wedding gift. Her brother is marrying soon so she is shopping with her mother and aunt to celebrate the occasion.
"The price has dropped so we are searching for necklaces, bangles and earrings, but some of the shops are adding fees that are too high so we are haggling," she says.
The tradition of buying gold for a dowry, or as an investment, is strong among members of the South Asian community, who view gold as a safe haven for their money. As well as weddings, gold is also bought to celebrate birthdays and religious festivals.
"For the father, it becomes a social liability at the time of marriage to keep a certain quantity of gold depending on their social status to earn the respect of the in-laws. The daughter has to take from the father for the dowry," explains Anil Dhanak, the managing director of Kanz Jewels and the Dubai Gold & Jewellery Group, which has more than 600 members.
"Gold is from the ancient times. It is a safe haven so, if the price drops, they will rush out and buy. We noticed the sales figures going up last week."
While the price has been dropping since last October, Dhanak says it is only sudden changes, like those experienced this week, that trigger a rush.
"The fixed-income buyers don't monitor the price on a daily basis; it's only when it becomes headline news then they start buying," he adds.
Dhanak, who says he was actually born in the Deira souq in 1964, adds: "In India, taxation is high but you can inherit jewellery from mother to daughter and it is not taxable.
"On the other side, the law is not on the woman's side. In Europe, if you are married for several years you can claim on your husband's assets. In India, it is not that easy, so women by gold to make themselves secure."
But unlike savings or gold bars that are stored in banks, gold jewellery can be worn and still go up in value.
Dubai-resident Sharma says he will wear the gold necklace he is about to purchase.
"I don't keep it in a safe, I wear it. I'm walking around wearing my savings," he says, adding that he hopes to buy 20 grams that day to add to his existing collection of 60 grams.
Like many, he says the main reason for buying in Dubai is because, unlike India, the gold is 100 per cent pure.
"In India there are too many different metals mixed into the gold," he says.
Dhanak explains that purity levels are maintained in Dubai because of strict regulations and random testing carried out by the municipality.
"If a sample is not above the purity mark, the retailer gets a fine and can have their trade licence suspended depending on how many times they offend. So when we sell 22 carat, we are actually selling above 22 carat so as not to fail."
While everyone is aware of the price, few are bothered about what is causing the gold slump. Read the business pages and there is talk of a Cyprus sell-off, a recovering US economy and a faltering Chinese economy.
But for Zaradkhan Sultan, 26, who works in the cosmetics industry and has lived in Dubai for 10 years, it is not why the price is falling that is important but simply the fact that it is.
He buys gold every month to send home with family members to his wives in his native home in Pakistan.
"I'm going to spend Dh6,000 today, which is more than I normally spend but that's mostly because of the price. This is my savings plan. I have a business but otherwise all my savings are in gold."
And it's not just visitors from the Asian communities taking advantage.
While the majority of souq visitors are South Asians, Arabs and Africans wearing colourful kaftans, a few western tourists can also be found.
Australians Melinda, 57, a secretary, and her husband Keith Skinner, a government manger, are standing outside a shop discussing prices.
They are on a four-week tour around the Middle East and Italy.
"The price has not affected our decision as we would have bought anyway, but we still consider it an investment," says Melinda.
"I am wearing a necklace that was passed down to me from previous generations, so we'll buy something for our daughter and granddaughter as well.
"When we head back to Australia, we're passing though Abu Dhabi, so we might buy some more there, too."
To ensure they secured the best deal, the couple walked up and down the street comparing prices, something Dhanak agrees is the best strategy.
"You ask what the price is in one store and then ask the next store and compare," he says.
"Haggling is not necessary. Everybody needs a sale and nobody likes to lose a customer. If the sales person thinks you are a serious buyer, he will not allow you to go to the next store."
But despite the rush, some buyers are waiting longer before they commit.
"I think the last couple of days have been quieter", says Mohammed Ayub, the manager of Roots Jewellery, which features jewellery sets - comprising a necklace, earrings and bracelet - with the most expensive collection going for Dh10,600.
"Last week was fantastic, but this week is a little slower as people wait to see if the price will go down further."
And at the Gold & Diamond Park on the edge of Sheikh Zayed Road in new Dubai, the scene could not be more different. While the Deira souq was bustling with activity, only a handful of people strolled around the indoor park built by Emaar two years ago.
Russian Nasti, 22, a visitor from Russia who is staying in the emirate with her sister, was shopping for yellow gold with her mother.
"We can't find much yellow gold in Russia so we are looking here, but I had no idea there was a drop in price," she says.
Jewellers says the park caters more for residents living locally than the tourist trade, who are taken to the Gold Souq by tourist operators.
But with only a handful of the 40 or so shops selling gold, the emphasis is on diamonds, leaving the Deira souq to cater to the gold buyers and those more sensitive to price fluctuations.
Dhanak, from Kanz Jewels, adds: "I've been in business for 32 years and some people will buy no matter what the price. The modern economy has supported the confidence in gold because everything that is modern has failed. People put money in property and lost; in the share market and lost and in currency and they lost. So they stay with gold."
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