Khaleej Times

UAE - Mad rush for gold as prices dip

By The Khaleej Times -

September 15th, 2008: (MENAFN - Khaleej Times) People, mostly Asians, have been flocking to the gold markets in Abu Dhabi and Dubai to buy coins and jewellery in the last couple of days as prices of the metal have dropped by Dh15 a gram.

The shops reported up to 300 per cent more business than in the days ahead of Eid Al Fitr last year. A jewellery shopkeeper at Hamdan Street in Abu Dhabi said he sold over 5kg of gold in a few hours on Sunday and some other said customers are buying gold as though it is being offered free.

The customers began to throng the jewellery shops from Thursday evening on hearing the news that the gold prices have slid by several dirhams. They jostled to reach the cash counters to grab the gold coins.

Most of the customers whom this reporter spoke with were shopping for Eid Al Fitr and Onam, a festival of Keralites that ends on Tuesday. A large number of them purchased Ginni (gold coins) and biscuits for investment purposes, hoping to exchange them with cash or jewellery after the prices go up.

Coins were sold out fast in most of the jewellery shops in Abu Dhabi and Dubai on Thursday evening when the price of 22 carat gold came down to Dh84.50 a gram from Dh100-104 a couple of months ago, while the price of 24 carat of gold slipped to Dh89.50 a gram.

On Sunday, 22 carat gold was sold at Dh86.50 a gram and 24 carat at Dh92 a gram.

The crowd of customers surged both in Abu Dhabi and Dubai in the evening hours.

Before Eid in 2007, most of the gold shopkeepers in Dubai and Abu Dhabi lost over 20 per cent business due to high rates. Now, they are doing 300 per cent more business.

Many Indians and Pakistanis visit their homes for Eid celebrations and to get their daughters married for which they buy gold jewellery.

Abu Dhabi's gold market is totally dependent on Asian expatriates and visitors. Very few people from the West buy gold from here. Most of them make their purchases from Dubai and they usually go for diamonds.

Indians and Pakistanis love 22 carat gold jewellery and they do not buy diamonds as their resale value drop by around 40 per cent.

According to Sheejan Thomas, manager, Joy Alukkas Jewellery at Hamdan in Abu Dhabi, "We have done over 200 per cent more business this time as compared to the same time last year. The reason is obvious: low prices. Residents are purchasing both 22 and 24 carat gold for investment and wedding purposes. We finished our stock of gold coins and biscuits in two days.

"We have mostly Asian customers, particularly from India. As Asians crave for 22 carat gold jewellery, we deal in them only. We don't sell 24 carat gold jewellery."

Uzair Alam, cashier at Pure Gold in Dubai's oldest 'Souq Al Zahab' (Gold Market) in Deira, said, "For the past three days, our shops have been completely packed with customers purchasing jewellery.

"In Dubai, our business has been all-time high, reaching over 300 per cent as compared to September last year. People are purchasing jewellery as if they are being given free."

Cushar Patni, manager, Ajanta Jewellers in the capital, said, "We made 200-300 per cent more business than the same period last year.

"This is because of the low prices of gold. We don't think the prices will go down further. They are, in fact, going up gradually. Many people are purchasing gold this time for investment purposes."

Suresh Jha, a customer, said, "As soon as I heard the prices have come down, I rushed to the shop and bought gold. I will sell it when the prices go up or I'll exchange it with other jewellery."

The Khaleej Times

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