DUBAI (Commodity Online): Saudi Arabia’s jewelers have witnessed a major fall of around 30 per cent in the first six months of the year.
The reason they provided for the fall is economic slowdown and high gold prices.
Gold prices posted around 39 per cent rise to $945 an ounce now. Market analysts feel that gold prices are just too high at the moment and people cannot afford these prices.
Jewellery shop owners said the economic crisis is also making people think twice before they spend. The pace of Saudi consumption was unlikely to improve unless the price falls.
A slower summer season with less visitors than last year has also contributed to the drop in sales in the Arab world’s largest economy.
Demand for gold in the Middle East fell 26 per cent year-on-year during the first quarter.
Jewellery demand makes up much more of the market in the Middle East than investment demand, so the region’s gold sellers have felt the benefit of investor interest less than elsewhere. Gold sales in the neighbouring UAE have seen a similar decline.
Dubai, the city of gold, is also facing a double whammy of low flow of tourists and dwindling gold sale. Dubai has been a paradise for tourists and shopping freaks for years and now the city has to put up with a slump in tourist arrivals because of the recession in several developed nations.
With the tourist flow slowing down and shoppers shying away from jewellery shops considering the high price of gold, jewelers in Dubai witnessed a huge fall in sales.
According to a report appeared in a leading English daily, gold jewellery sales came down by around 30 per cent in June as compared to the previous year in Dubai.
The main attraction for tourists in Dubai is its tax-free gold, which is comparatively cheaper than other markets across the globe.
However, this year the tourist flow is very weak and the city is struggling to cope with the situation. Another factor is that because of the high prices, Malayalis visiting Kerala during vacation are now shying away from buying gold.
In normal circumstances Dubai receives around 7 million tourists in a year. But this year the number has dwindled by almost 30-40 per cent.
Retailers in Dubai’s gold souk believe the slow sales will continue until the end of September and might pick up by the end of the year as the economy recovers.
Many retailers have started to introduce 22 karat gold into their product mix, rather than 18 karat, as it is more popular with buyers from the subcontinent due to its higher value.
