UAE gold prices: Shoppers are buying, booking as gold rates get close to year’s lowest

Dubai: The good news for gold buyers in the UAE continues.

At Dh205.00 a gram for 22K, the UAE gold rate is within touching distance of the year’s lowest rate of Dh203, which was late February. On Tuesday (October 3), international bullion prices dropped a further $20 plus to $1,820 an ounce. Which means that since September 13, gold has been stripped off by more than $110 on an ounce basis.

But here’s the most important detail for shoppers – the drop to below $1,900 an ounce happened only last week.

As shoppers pile in, retailers have only one sentiment – “This year, ‘festival’ buying has certainly started early for gold…”. 

More price drops?

There are many UAE resident buyers hoping for further drops and making advance bookings using the price lock-in feature offered by most jewellery retailers.

In fact, the number of shoppers who booked – to buy by/before November 15 – was running almost 50:50 with those who bought new gold between last Friday to Sunday, which was when bullion prices started to decline sharply.

It is the first time that actual gold sales to bookings are running neck-to-neck. In the past, bookings would make up about 10 per cent or less of daily shopper traffic at jewellery stores, retailers say.

Clearly, UAE gold shoppers have been learning well about gold’s movements, and what they should be doing to make full use of price drops. If the drop is favourable, then buy now – or book for later.

On Monday, prices hold steady – and then…

In the last 3 years, each gold price slide was met with an immediate rebound, almost always dashing shoppers’ hopes that a return to $1,900 levels would not happen. On Monday (October 2), for long stretches of the day it felt that the latest drop would come to a halt, with prices hovering in the $1,840 plus range. But that have away to another drop, this time by more than $20. Since September 13, the bullion has seen a cut by more than $110 on an ounce basis.

Extend the golden run

“UAE gold demand from Friday (September 29) to Sunday represented the biggest sales this year, just behind the period when the price was Dh203 a gram in February,” said Shamlal Ahamed, Managing Director – International Operations at Malabar Gold & Diamonds.

At Dh205 plus level, there is significant demand again – the outright purchases are being done by tourist shoppers, while many residents prefer to do the price lock-in and buy before November 15.

– Shamlal Ahamed of Malabar Gold & Diamonds.

“To be honest, we didn’t see that much of buyers wanting to exchange their gold for new. That buying typically happens during May/June ahead of the summer holiday travel. Right now, a majority of the buying taking place is brand new.”

This price drop is coming at a most favourable time – first, there is the start of the busy tourist season in the UAE. And these visitors turned up in strength in the last four days. “Anything close to Dh200 a gram is seen as the ideal entry point for tourist buyers,” said one retailer. “Going by how gold prices have been in the last 7 months, Dh205 is good enough.”

Resident shoppers, meanwhile, have the luxury of adopting a more patient outlook. Which explains the heavy interest in booking, thus getting a lock-in at the Dh205.75 level. If prices drop further, then they get billed on that – provided they buy before November 15. 

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