By Joel Bowman
Yellow metal crashes through $800 barrier in response to US Federal Reserve move to cut interest rates.
Lagging UAE gold sales are likely to suffer further after the yellow metal crashed through the psychological $800 barrier on Wednesday in response to the US Federal Reserve’s 25-point cut in interest rates.
The skyrocketing price of gold has squeezed profits from both wholesale and retail gold markets in the Emirates, which have already seen year-on-year sales slow as high prices put off the millions of tourists that flood the country's gold and jewelry souks throughout the year.
Dubai sales growth from August to September contracted from 26% to just 13%, while sales volume in Abu Dhabi fell 20% for the month of September. Dubai traders had expected a 40% rise in sales.
Gold, historically a hedge for investors bearish on the US dollar, broke the $800 mark for the first time since 1980 in Wednesday's trading as the beleaguered greenback plummetted to fresh record lows against global currencies.
Goldl closed trading on Wednesday at $799.90 an ounce.
Traders had been hoping October and November would see sales pick back up, but the continued surge in the price of gold could stunt the recovery.
Some local traders feared gold sales volume in the UAE could fall by about 10% in volume this year, as they did in the previous year due to both volatile and high prices.
However, Tawhid Abdullah, managing director of Dubai Gold and Jewellery Group, said in September that neither the value or volume of gold sales will go down this year and that there was little chance of Dubai sales slumping as they have in Abu Dhabi.For all the latest retail news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.