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Source: Reuters
Gold jewellery sales in Dubai are down around 40% in May on a
year ago, hit by higher prices for the precious metal and fewer
tourists with smaller budgets, retailers said.
Branded as the City of Gold, the streets of Dubai's Gold Souk are
getting fewer visitors, particularly foreigners who account for a
large number of the visitors to Dubai's souk.
"Just walk around the market here you will hardly find any
tourists," said Sanjay Jity, a shop keeper from Al Khaledyah
Jewellery in the old souk, or market.
"The price of gold is too high and people have no money, that's why
we are seeing a slowdown in the market and our sales have gone down
by 40%," said Viral Bhalani, a shop keeper at Hem's Jewelry in the
old souk.
Some Dubai jewellery shops may face closure, as do their
competitors in the United Arab Emirates' capital of Abu
Dhabi.
On a global level gold prices have risen around 40% to around
US$957 an ounce as of Friday from a low near US$680 in October, as
investors used the yellow metal as a safe haven during a time of
economic uncertainty.
"Retailers are suffering becasue of the current high prices," said
Pradeep Unni, a trader from Richcomm Global Services.
In effort to stimulate business, shops in Duabi are offering
discounts.
"I was offered more than a 50% discount on a gold ring I
bought," said Christine Rattray, a Scottish tourist.
"We are basically cutting our profit margins on the design of a
piece of jewellery and in many cases selling at a loss just to keep
customers coming back," said another shop keeper at Shyam Jewelers,
also in the old souk.
He said many store owners in the market were in negotiations with
the government to lower rents.
"I think we are going to see a recovery by 2010, but
until then we need lower rents, otherwise we might shut down," he
said.
Demand for gold in the Middle East fell 26% year-on-year during the
first quarter, bucking a global trend that saw demand increase as
investors bought gold as a safe haven from the economic maelstrom,
the World Gold Council (WGC) said in its quarterly report.
Both jewellery and investment recorded similar percentage declines,
with a fall of 26% to 49.5 tonnes and 28% to 4.1 tonnes
respectively, it said.
High scrap demand
Gold refiners in the Middle East have bought record volumes of
scrap from overseas and the global economic crisis has forced some
cash-strapped consumers to sell their jewellery.
"My family is a bit tight on cash these days that's why I'm selling
bracelets my husband bought me for my wedding," said Hamidia Omran,
a Jordanian housewife living in Dubai.
She went to the souk on Sunday to sell the gold bands.
"Gold is really important to a woman but it's a good price to sell
at and when things get better I'll buy more back."
