As gold dropped below $2,000 an ounce, UAE gold shoppers rushed to stores on Akshay Tritiya

UAE shoppers made the most of the $20 drop in gold prices on Akshay Tritiya and thronged to stores to buy gold jewellery. Local gold retailers padded up their promotions with offers of gold coins, cashback schemes, and cuts on making charges of up to 25%

Shoppers in the UAE heading to a gold and jewellery store on April 22 for their Akshay Tritiya purchases got themselves a good break – gold prices had dropped by more than $20 to close below $2,000 an ounce.

Local gold retailers padded up their promotions with offers of gold coins, cashback schemes, and cuts on making charges (of up to 25%) while convincing shoppers it still makes sense to buy now. (Also, given the prevailing gold rates, exchange schemes too are promoted heavily.)

But have gold prices cooled enough to bring shoppers back at levels typically seen on Akshay Tritiya? “Shoppers are not staying away from gold this Akshay Tritiya, buying gold is a tradition they have been used to and they will this year as well,” said Abdul Salam KP, Vice-Chairman of Malabar Gold & Diamonds. “Plus, there is an acceptance that gold prices could remain higher for longer. The initial resistance shown when gold was trading at $2,000 plus has gone down.”

Through recent years, Akshay Tritiya has also been the day when UAE gold sales have had some of their biggest daily sales, averaging those made during Diwali in the second-half of a year. The festival is typically associated with buying new assets, be it gold, a home or a car. Jewellery retailers are saying, shoppers will do just that, and more so because of the Dh8 slide gold has had on the local rate in just over a week.

Over the last 30 days, gold has ranged over $2,000 and looked good enough to break its 2020 record price of $2,070 an ounce. The dollar’s recent weakness has also added to gold being the go-to asset, and which explains the build-up past $2,000. Analysts are confident gold still has enough to see it through past $2,100 at some point this year.

“Risk aversion is starting to run wild and safe-haven flows are once again coming gold’s way,” said Edward Moya, Senior Market Analyst at the consultancy Oanda. “Too many risks remain on the table and investors are going to need some safety going forward. As the risks to the outlook pile up, gold is starting to look even more attractive.”

That’s what investors are doing, but what about shoppers? As has always been the case when gold shows signs of soaring, shoppers try to time their entry before prices get too hot. This could explain why shoppers in UAE – and those visitors and tourists spending their Eid here – are picking up some gold too this week.

Anil Dhanak, Managing Director of Kanz Jewels, says the buyer dynamics are clear. “Most regular and seasonal buyers are getting accustomed to this new level of the gold price which has sustained itself unlike previous surges,” said Dhanak. “And this being an auspicious time of year for buying gold, we expect shoppers to continue buying. I am quite bullish on gold given that the US Fed has probably reached the peak of interest rate hikes. The recent shake-up at some US banks too has boosted confidence in gold as a safe haven asset.”

Ahead of Akshay Tritiya, UAE jewellery retailers were given a partial boost from tourist spending. This was at a time when it was felt gold had gotten too high for tourists to spend their dollars on any buys.

Again, the talk that gold could be heading even higher seems to have prompted them to buy now and await any future gains. “Indian visitors to the UAE are definitely back to buying, and we will see them through this weekend,” said Salam. “What’s most interesting for UAE gold retailers is the growing presence of Chinese tourist shoppers. If their buying support comes in more frequently, it creates another big breakthrough for UAE’s gold and diamond trade.”

Courtesy: Gulf News