Gold rate: UAE shoppers snap up deals at Dubai souq as prices fall

Buyers take advantage of low costs and flock for precious metal

Shoppers explore the Deira Gold Souq in Deira. All photos: Khushnum Bhandari / The National

The rich displays of the gold souq.

A salesman adding pieces to the window display.

Crowds brave the summer heat at the Deira souq.

Anil Dhanak, founder of Kanz Jewellers, in the gold souq, Dubai.

The gold souq in Deira, Dubai.

Wares on display at the gold souq in Deira.

Sales staff at Kanz Jewellers in the gold souq.

A dazzling window display at the gold souq.

A staff member adds pieces to a window display at the gold souq. It is a popular attraction for visitors to Dubai.

Intricately crafted items fill a window at the souq.

A shopkeeper makes sure that his windows gleam as much as the gold items on sale behind them.

Window shopping at the gold souq.

Vishal Dhakan, director of Dhakan Jewellers, stands behind his counter, surrounded by an array of gold items.

Traders in Dubai’s historic Deira Souq say sales are up as gold prices are in decline.

One supplier said business had increased 30 per cent on a regular month, buoyed by the price fall, Eid Al Adha holidays and pent-up demand sparked by the Covid-19 pandemic.

Other retailers said they had noticed sold more gold than usual in the past few days.

A gram of 22-carat gold cost Dh198 ($53) in Dubai on Friday — with the price now falling to less than Dh200 for the first time this year.

“The surge has been going on for a while,” said Satyen Choksi, director of Nimisha Jewellery in Dubai. “We are up by about 30 per cent on a regular month.

Mr Choksi, whose wholesale business provides the precious metal to shops in Deira Gold Souq, said strong sales were also recorded at Eid Al Fitr. “Every time the price comes down, people take the opportunity,” he said.

At the Deira market, people are braving the July heat to take advantage of such deals.

“The dropping price does make customers more interested,” said Vishal Dhakan, director of Dhakan Jewellers. “But it is too early to put a figure on it. We will know by the end of July.”

Mr Dhakan, whose business has 14 shops in Dubai with the first opening in 1978, said custom had been brisk this year, with business also boosted by the partnership deal signed in February between the UAE and India.

This led to the scrapping of a 5 per cent import duty on jewellery exported to the UAE from India, while the subcontinent has agreed to a 1 per cent tax concession on gold imports from the Emirates.

“People in India prefer buying gold in Dubai,” Mr Dhakan said. “Every tourist to Dubai has gold on the itinerary.”

Anil Dhanak, founder of Kanz Jewels, who has been in the gold business for about four decades, said that because the decrease in price had come only in the past few days, it was too early to assess its effect on sales.

“We will able to tell one week from now,” he said. “One can’t figure out whether the increase in sales is because of the Eid holiday or price factor.

“Gold buying is not impulse buying. People plan. But business is good over the past few months.”

The most popular pieces at the souq were typically 22-carat bangles and necklaces. Many tourists won’t return until the autumn, traders say.

Mr Choksi said current trends show gold is now chiefly being bought by workers and the middle classes, who want to buy a gift but also want make sure it doubles as an investment, while wealthier people are buying for luxury.

“Wealthy people are buying Gucci handbags but not gold,” he said.

Gold is often regarded as a safe investment in times of uncertainty and stock market volatility. During the early days of the pandemic, gold prices hit record highs, exceeding $2,000 an ounce. There was another surge earlier this year before prices fell to their current level of about $1,743.

“Gold is based on mindset,” said Divij Popley at Popley Jewellers.

“People think the gold price will go lower, so they won’t buy. But when it does go down, people buy more. There is a slight increase over the past few days.”

A report from the World Gold Council released this month said "continued inflation and geopolitical risks will sustain demand for gold as a hedge" but it also forecast a “widespread economic slowdown to put pressure on consumer demand for gold”, despite a good first half of the year for the precious metal.

Naeem Aslam, chief analyst at AvaTrade, said gold would remain volatile but he forecast a fall in prices.

“The overall trend is going to be a gradual move to the downside,” he said.

“This is because we think the US economy is heading for a soft landing and the dollar index will maintain its strength as the [Federal Reserve] will increase rates.”

Back at the Deira Souq, many customers at Dhakan were not hugely concerned about the global outlook and were looking to take advantage of the good deals on offer.

“It is risky to wait,” said one customer studying gold bracelets. “The best time to buy is now.”