UAE gold demand drops again as shoppers turn extra sensitive to high prices
Tue July 30 2024
When prices have shot up by $300-$400 in just 6 months, a majority of gold and jewellery shoppers prefer to stay on the sidelines for rates to cool off. Or at least show signs of staying at a certain price level.
That’s exactly what shoppers in the UAE too have been doing o their gold purchases in the first-half of 2024, with jewllery sales declining by 13 per cent from a year ago, according to new World Gold Council data. It was also the the sixth consecutive year-on-year decline in UAE gold jewllery sales volumes.
“Shoppers don’t want to be buying at the top of the price range,” said Andrew Naylor, Head of Middle East and Public Policy at the World Gold Council. “Even the growth in investment demand for gold - through gold bars and coins - has dropped from a year ago level.”
Gold prices are currently at $2,383 an ounce levels, having topped a new record of $2,483 just weeks ago. And just for comparison, it was at $2,062 an ounce on January 1, 2024. (At that time, $2,000 was seen as an ‘attractive’ prive level for jewellery shoppers to buy.)
Those numbers in a nutshell explain exactly what’s been happening with gold and jewllery, with demand in China - the world’ biggest consumer of the metal - the only market that’s net positive from a year ago.
Buy in ‘fractions’
At current levels, there are other ways that investors are trying to get a slice of the gold action. And that’s through fractional buying. “In the UAE, there are digital platforms offering fractional sales in gold, and that’s proving popular with a growing base of buyers,” said Naylor.
“This is particularly true with buyers sensitive to prices.”
Interestingly, demand for bars and coins cooled off significantly, after having recorded a significant demand spike same time last year. At the time, it was thought that demand for gold bars and coins would prove resilient amidst the high volatility in prices. Clearly, that’s not how it has panned out.
“When buying a one ounce gold coin or 1 kilo bar of gold, investors are clearly thinking on a unit basis relative to the price at the time,” said Naylor. “But when it comes to jewellery, there is a mind shift - a Dh1,000 investment clearly will not get the buyer the same grams she got 4-5 years ago. That's when they get extra sensitive about the price.”
As for UAE jewellers, they have cut down on making charges, or having frequent promotions featuring add-ons such as a certain weight of gold in grams if the purchase hits a certain level. “Jewellers have been passing on lower making charges where possible,” said Naylor. “Whether that’s to try and protect their market share or to create a nshort spike demand. It’s all being done.”
Source: https://gulfnews.com/