Dubai gold sellers expect downturn in Diwali business

Dubai’s traditional gold sellers are expecting up to 30 percent less customers during the lead up to Diwali as gold prices continue to surge amid global market turmoil.

Diwali and Dhanteras, two festivals most auspicious for buying gold, should be one of gold traders’ busiest selling periods after the Dubai Shopping Festival, but the continued rising cost of gold is forcing many customers to reconsider their purchases, according to gold sellers at Dubai’s historic Gold Souq.

“A few weeks ago gold prices were pretty stable but now they’ve shot up. Volatile prices are definitely a worry and will almost certainly affect sales,” Swatna Nair, general manager at Dubai Gold & Jewellery Group told Arabian Business.

Deepening worries over global financial markets has increased the appeal of gold as an alternative investment with prices of the precious metal touching new highs.

In New York the price of gold increased 3.1 percent to $859 an ounce last week while investment in SPDR Gold Trust, the world’s largest gold-backed ETF, reached a record 765.7 metric tonnes on Thursday as global central bank’s synchronised interest rate cuts failed to free up credit markets.

“Last Diwali we were selling gold at around $24 per gram and this year its $28.17 per gram. We’re expecting around 30 percent less customers this year and those that are buying will be buying less quantity,” said Faizel Koppath, sales executive at Atlas Jewellery in Dubai.

A survey by newswire Bloomberg predicts gold will continue to rise for a second straight week on speculation that government intervention will fail to ease market turmoil, further boosting the appeal of the precious metal.

“Over long periods of time it [gold] has kept its purchasing power,” said Eckart Woeurtz an analyst at Gulf Research House in Dubai.

“Over the next year I expect gold to reach $1000 an ounce. In the middle to long run I am very bullish on it,” he added.