The gold price has plummeted to a record-breaking $3,200 an ounce, for the first time in history, sending shockwaves through the global market and Dubai’s gold industry.
Unprecedented Price Drop
• The Dubai gold rate has dropped to Dh358 a gram for 22K, a staggering 24-dharam per gram in just four days. • The Saudi gold rate for a gram of 22K is SR361, highlighting the significant price disparity between the two countries. • This unprecedented price drop has left jewellery retailers and traders bewildered, with many questioning the long-term viability of gold as a store of value.
Nothing like this has happened before, say jewellery retailers, and adding that it will take a lot of convincing for people to buy at these levels.
The Perfect Storm of Uncertainty
• Global markets are on edge due to the intensified US-China trade war, which has added to overall uncertainty. • The US stocks ended down yesterday, while Asian markets have opened in the deep red this morning. • The weakening of the US dollar has also contributed to the volatility, making gold a more attractive option.
| Reasons for Gold’s Surge | • Intensified US-China trade war adds to overall uncertainty | • Weakening of the US dollar |
The perfect storm of uncertainty has driven gold prices to record-breaking levels, with the $3,200/oz barrier finally breached.
Challenges for Jewellers
• The only demand from UAE shoppers is for gold investment bars, with jewellery sales at extremely low levels. • UAE shoppers are not even willing to consider gold exchanges, citing concerns over prices. • “The only demand from UAE shoppers is for gold investment bars,” said Anil Dhanak, Managing Director of Kanz Jewels.
“Jewellery sales are at extremely low levels, and UAE shoppers are not even willing to consider gold exchanges. “They now feel they have a better chance of getting more if they hold. The way gold’s performing, what they say makes genuine sense. “It won’t be enough for jewellery retailers to say that gold’s a safe haven asset, so keep buying.”
Industry Insights
• “Gold price has reached a level where even making charge cuts won’t be enough,” said one gold wholesaler. • “Even zero making charges may not be enough. “It will take a Dh20-Dh30 a gram price drop to make shoppers feel they are getting a price they are comfortable with.”
• Tourists shopping for gold too has had a steep drop in recent days, finding prices too high a barrier for entry.
“UAE gold price has a 6% price advantage over India, but which used to be 15% until mid-2024,” said a jeweller. “A shopper from Saudi Arabia gets the 5% VAT refund when buying in UAE compared to 15% in the Kingdom,” said the jeweller. This price disparity is affecting tourist shoppers, who are finding it difficult to justify the higher prices in Dubai compared to other destinations.
The End of an Era?
• The record-breaking gold price drop marks the end of an era in Dubai’s gold industry, say some experts. • The industry will have to rework its promotions to get a response from shoppers. • “Gold price has reached a level where even making charge cuts won’t be enough,” said one gold wholesaler.
