Dubai's gold sellers are pinning hopes for a demand boost on foreign workers' willingness to spend part of their savings to buy jewelry and bullion gifts for loved ones before they head home for summer holidays.A large chunk of Dubai's expatriate community, mainly from the Indian subcontinent, spend part of the summer abroad.
“This is the time when we get many serious buyers as everyone, particularly from India and Pakistan, is keen on buying gold gifts,” said Salem Mohammad, a Dubai-based jeweler.
“Prices are also relatively cheap compared with a few months ago, and we also offer good deals this season,” he said.
Gold and jewellery trade in Dubai, the Gulf's trade and tourism hub, is fuelled by demand from the Arab world and India, the world's top gold market.
Dubai's gold jewelry sales volume rose 18% in May on relatively less volatile and lower gold prices, according to the Dubai Gold and Jewellery Group.
Declines in sales volume of gold jewelry sales and bullion imports earlier this year have deepened anxiety among traders that the emirate may lose its luster as a regional gold hub.
“Since March we have not seen any drops, and we should continue to see an upward trend in terms of sales volume and value,” said Tawhid Abdullah, managing director of the Dubai Gold and Jewellery Group.
“We are not worried as long as prices remain around the $900-$950 level,” he told Reuters.
Gold prices rallied to a high of $945.80 an ounce on Tuesday, its strongest level since April 18. It has since fallen as easing oil prices reduced the metal's appeal as a hedge against inflation.
Traders said that India's June to September monsoon season, the prelude to the start of the country's main wedding season, was also boosting demand in Dubai.
“Even if people are not going on holidays, the Indian community here buy gold for marriage in this season, and in large quantities,” one bullion trader said.
Tax-free jewelry in the gold souks and shopping malls in Dubai draws Gulf Arab and Western tourists.
The emirate has the highest concentration of jewelry shops in the world, generating trade worth $35 billion last year – 20% of the $173 billion total global jewelry trade. (Reuters)