Jewellery retailers say gold sales have fallen as economic downturn deters tourists.
Gold jewellery sales in Dubai are down around 30 percent in June on a year ago, as high prices of the metal and the economic downturn deter tourists from visiting the emirate, five jewellery retailers said.
Almost 8 million tourists visited the emirate, branded the City of Gold, last year, many of them lured by the tax-free jewellery. But retailers Reuters spoke to say the have seen far fewer tourists this year due to the economic crisis.
"In June sales were down about 30 percent from last year. Because of the hot weather and economic conditions less tourists are here to shop," said Sanjay Jity, a shop keeper from Al Khaledyah Jewellery in the old souk, or market.
Hotel revenues in Dubai fell 40 percent this May and June compared with the same months last year, according to hospitality agency STR Global.
The Dubai Department of Tourism and Commerce Marketing said 7.7 million tourists came to Dubai in the year to December, but had no updated figures for this year.
The higher price of gold has also deterred buyers, another salesman at the souk said. The retail price of 22 karat gold was around AED101 per gram, 20 percent higher than last year, he said.
"Many people now can't afford these prices," the salesman said.
Gold has risen around 26 percent to about $921.75 an ounce on Wednesday from a low near $680 in October, as investors buy the metal as a safe haven in a time of economic uncertainty.
Demand for gold in the Middle East fell 26 percent year-on-year during the first quarter, bucking a global trend that saw demand increase as investors bought gold as a safe haven from the economic maelstrom, the World Gold Council (WGC) said in its quarterly report in May.
"The volatile prices of gold is another factor that is scaring buyers, but I think the price will stabilise over the coming few months which should push sales up again," said Pradeep Unni, a trader from Richcomm Global Services.
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.
"We are hoping that the economic conditions will improve by October to November, otherwise many businesses will be in trouble," a retailer said.
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, traders said. (Reuters)
Please ask DGJG(Dubai Gold & Jewellery Group) and they will still confirm that business has been growing at the rate of 30% as they have been commenting on the gold Business and for the last 10Years. Most retailer will confirm that the business is down 70% and are loosing money.
High time the jewellers realise that the party is over...with more jewellery stores than laundries and groceries in Dubai, this was bound to happen...its indees a wake up call