UAE Gold Market in Revival Phase

While the gold market in the UAE witnessed a slight pull back effect, following the introduction of the value added tax (VAT), the market is now firmly in its revival phase, said Ramesh Kalyanaraman, chairman and managing director of Kalyan Jewellers.

Speaking at a media roundtable on Saturday, Kalyanaraman described the gold market in the UAE as being very dynamic. “The market is revived post VAT and customers are buying again. We are working on our targets and have several expansion plans for the GCC region. We plan to open three more stores in the UAE by the end of this year; and we have plans to open two stores in Kuwait and one in Bahrain.”

Presently, the group has no plans to enter the KSA market, but an entry into the US market might still be on the cards in the future. “Right now, we are comfortable with our current showroom spread and expansion for the GCC region.”

Speaking about the competition in the market, he noted that other jewellery brands were adopting a similar approach and pace. Dubai, he said, has firmly retained its position as a hub for gold.

“No visitor returns from a trip to Dubai without having bought at least some jewellery,” he said. “Also, tourists are being offered a refund for their VAT and that has definitely helped. The rates are still very attractive here in the UAE, and, like other changes in the market that came before, consumers have adapted.”

Asked about the recent fluctuations in gold prices, Kalyanaraman pointed out that it was very difficult to predict where gold prices were headed. “There are several external factors that determine the price of gold at any given moment. Around 10 years ago, it all depended on the season; some seasons the prices would go up, while some seasons saw a drop. Today, it is more than just the supply and the demand that determine prices.”

However, he highlighted the fact that consumers today were not as affected by gold prices as they had previously been. “More and more, we see consumers buying gold to wear; the fact that it is an investment is just a bonus to them. Of course, the fact that it is a highly liquid metal just adds to its popularity.”

Speaking on popular designs and customer preferences, Kalyanaraman said that Bollywood and social media had played a large role in influencing the demand for certain pieces. The popularity of yellow gold had slowly waned, he said. “We used to see yellow gold making up 90-95 per cent of sales, however, now we are seeing it drop to 75 per cent approximately. Thanks to social media and the film industry, customers are seeing lots of new and different designs and they want to wear them. We see this as an opportunity to innovate.”

Responding to a question about plans for an IPO, he said: “Yes, an IPO is always there at the back of our mind, but we haven’t reached a decision on the timing. Whenever we need capital, we will go for an IPO, but as of now, we are happy with running the show for the next couple of years with our own capital.”