After jewellery demand evaporated between April to end June, when only 1.3 tonnes of demand was generated, there was a clear improvement in the third quarter (3.8 tonnes) and capping it off by shifting 6.9 tonnes in the final three months of 2020. Above, a customer buying gold with COVID-19 safety precautions at Kanz Jewels in Deira gold souk.
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“There were days when the sales staff would say that they didn’t see a single shopper,” said Cyriac Varghese of Sky Jewellery. “But since October, they are coming back. Sure, the numbers are nowhere near 2018 or 2019 levels – but there is a definite mood in the industry that the worst phase is over.”
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Yes, the citizens and residents of the UAE are back for gold. The 6.9 tonnes of jewellery do not match the usual average of 8-9 tonnes a quarter from pre-COVID-19 times. But in a year when everything changed – and seemingly, even the dynamics of gold investing – it’s not a number to get retailers into a permanent state of funk.
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Even the 1.9 tonnes of the second quarter 2020 is something retailers in the ‘City of Gold’ can now, with hindsight, take in their stride. This was the phase coinciding with the restrictions on commercial activity to take on COVID-19 and arrest its spread.
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And now the comfort factor is back – for shoppers and retailers. According to World Gold Council data, across all of the major gold consumption markets, shoppers were finally adjusting to the $1,830 plus levels. It was the same sentiment that was showing up in the UAE’s gold trade.
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Average transactions have been in the Dh3,000-Dh4,000 range, with the Dubai Gold Price hovering at Dh209 a gram. That compares with the all-time high of Dh235 it touched in early August.
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“The perception that gold is the ultimate safe asset was magnified during the COVID-19 months,” said a retailer. “That’s the buying activity you are seeing at jewellery stores now. Consumers took some time to adjust, and $1,830 an ounce or Dh209/Dh10 a gram is a good level to adjust at.”
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Can December’s numbers sustain? Domestic shoppers now make up 80-90 per cent of the buying that went on in recent weeks. A lot of that spending had to do with shoppers treating themselves to a year-end present, or those wanting to put aside some of their savings into an asset that soared in 2020.
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But for this momentum to sustain, Dubai and the UAE gold trade will need tourist buying support. How soon that can materialise will play a pivotal role through the rest of the year.
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But there are glimmers that give hope to retailers – many of them reports buying interest
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