An worker adjusting ornaments in a jewelry store at Bur Dubai. Image for illustrative functions solely.
Picture Credit score: Pankaj Sharma/Gulf Information Archives
Dubai: UAE’s gold jewelry gross sales have been up 6 per cent within the first three months in comparison with a 12 months in the past – sufficient to offer a glimmer of hope to retailers. The truth is, the 10.7 tonnes they bought is the very best quarterly efficiency since This autumn-17, when customers picked up 11.1 tonnes of jewelry items, in keeping with World Gold Council knowledge launched on Thursday.
The DSF-focussed marketing campaign by jewelry retailers in January additionally had a hand within the improved gross sales. However with gold costs “oscillating” at across the $1,300 an oz. mark, extra UAE customers are adopting a wait-and-watch perspective on when and the way a lot they need to purchase. Nevertheless, considerations that gold costs will steadily push nicely previous the $1,300 mark appear unfounded… at the least for now.
On the plus facet, native customers have additionally adjusted to paying 5 per cent VAT on their gold purchases. “There was a bit of shopping for resistance when VAT was introduced in early 2018 and did influence on Q1-18 gross sales (10.1 tonnes),” stated John Mulligan, Head of Member and Market relations at WGC. “So, a 6 per cent improve from these ranges does counsel an enchancment in sentiments.”
Native jewellers add that issues might have been higher if there have been extra vacationers shopping for gold within the first quarter. “However there’s a sharp drop in gross sales to them; even Chinese language guests appear to be on a price range and that was by no means the case earlier than,” stated Abdul Salam Okay. P., Group Government Director at Malabar Gold & Diamonds.
“Usually, in quarter, gross sales to vacationers would make up 20-25 per cent, however in Q1-19, as a lot as 85 per cent of gold gross sales occurred with home customers. I consider the present worth ranges are holding again patrons.
“Even the common gross sales worth per transaction has come right down to about Dh3,000-Dh3,500 from round Dh4,500-Dh5,000 in 2016-17.”
Late final 12 months, the UAE allowed full refunds on the VAT portion to purchases made by vacationers right here. The truth is, the native jewelry sector was anticipating this to spark elevated shopping for help from abroad customers – thus far, this has not panned out.
Based on the WGC report, there might be different causes holding again demand from vacationers, particularly these from India. “The VAT refund provided to vacationers within the UAE has solely seen restricted take-up: specifically, Indian vacationers are reluctant to assert in case their data finds its technique to the Indian tax authorities,” the report provides.
By the seems to be of it, customers again in India had no such qualms – “There have been way more auspicious days throughout the first quarter than was the norm, and this was mirrored in demand for jewelry in addition to bars and cash,” stated Mulligan.
There have been 21 auspicious days thought-about ultimate for weddings within the Hindu calendar throughout Q1-19 – and that’s thrice that in Q1-18, the report finds.
Even India’s central financial institution is dedicated to gold, having picked up bullion persistently over the past 13 months. On this, the Reserve Financial institution of India just isn’t alone – central banks from nearly in all places have been stocking up on their yellow steel reserves. Collectively, they purchased 145.5 tonnes in Q1, up 68 per cent on the identical interval in 2018 and “representing the strongest begin to a 12 months since 2013”.