High gold prices dent UAE jewellery demand in Q1-2024 - when will shoppers come back?
High prices have definitely come in the way of UAE gold jewellery purchases in the first three months of 2024, with the asset hitting multiple peaks during the period. Today, even after last week’s correction, gold is trading at $2,323 an ounce (at 9:40am), down nearly $10. The UAE gold rate is at Dh260.75 for a gram of 22K. (In the last 10 days, its highest was Dh262.25 a gram.)
“Pricing was the biggest factor impacting on jewellery demand, whether in the UAE, China or India,” said Andrew Naylor, the Head of Middle East and Public Policy at World Gold Council, which has issued its quarterly update on trends in the market for gold.
That pricing left its dent on UAE demand is clear from the WGC data – Jewellery sales were lower by 10 per cent in the first quarter from a year ago. (In Saudi Arabia, the drop was by 12 per cent.)
Global demand too was muted, making this Q1-24 one of the weakest in recent years. (The corresponding period in 2020 was exceptionally weak, because of the Covid crisis and the start of gold’s push to higher levels.)
Gold demand in the UAE during April’s Eid shopping too came in lower than expected. Now, jewellery retailers are hoping that UAE resident shoppers will stir themselves to engage in some heavier buying on May 10, which is when the Indian festival of ‘Akshaya Trithiya’ is marked. (This has been one of the high-point sales days for gold annually.)
Missed opportunity?
According to World Gold Council data, high prices impacted jewellery, but that so far has not meant UAE shoppers moving in strength into gold coins and bars. Probably, they are waiting for a major correction or even a cooling-off to happen.
“What we have not seen here and in Asia markets is consumers going for heavy profit-taking from their gold holdings,” said Naylor. “Right through these months, they have not gone for that even with gold setting new price highs.
“In this, they were different from their peers in the West, who did some healthy levels of profit-taking.”
Briefly, last week, it did seem gold was going to soften to around $2,300 an ounce levels, or even below. That hope lasted for barely 24 hours. Gold's now back to pushing through to $2,340, and the corrections, if any, have gotten tighter, That will not cheer shoppers.
"Gold price trends continue to be bullish over the short and long term," said Vijay Valecha, Chief Investment Officer at Century Financial. "We did see a small correction from the highs of 2,400, but it only seems temporary. Gold might spring back to those levels in a few weeks..."
Source: https://gulfnews.com/