Retail sales of gold jewellery in Dubai and the rest of the UAE plummeted by as much as 45 per cent in the first quarter of 2009 from the same period in 2008, amid higher, more volatile prices for the metal. The decrease in sales was especially steep — by between 40 and 60 per cent — in comparison with the October-December quarter, according to data from the Dubai Multi Commodities Centre, or DMCC.
“The jewellery trade should seek to adapt to the current market realities and focus on different customer segments while offering more variety at attractive prices to lure back buyers. The trade must find out ways to operate on a reduced profit margin to come out of the sales slump,” said Ahmed bin Sulayem, Executive Chairman of the DMCC.
In spite of a period of unprecedented volatility in the global and regional gold trade, Dubai has reinforced its reputation as a vital centre for the gold trade, Sulayem said. “It is essential that we come together to address the challenges, and more importantly the opportunities that lie ahead,” he said on the sidelines of an industry gathering on Monday.
“We all recognise that the world is in the midst of one of the worst economic crisis ever seen. Here in Dubai too, we face challenges. But this city, and the wider Gulf region, is better positioned than most to emerge stronger from the current global crisis,” he said.
Responding to Sulayem’s suggestion, some of Dubai’s jewellery retailers said they were ready to cut margins if their overhead costs, including rents and other fees, dropped as well. “We can’t operate without a 4-5 per cent margin in the current market situation,” a leading jewellery retailer said, speaking on condition of anonymity.
In one sign of softer domestic demand, figures from the Dubai World Statistics Department indicate that the retail value of gold sold, including bullion and jewellery, rose by only five per cent during the first quarter, whereas the volume of gold imported here surged by 15 per cent surge in the same period.
Dubai imported a total of 140 tonnes of gold during the first quarter, up from 122 tonnes during the same period in 2008. The value of first-quarter retail gold sales in Dubai grew to Dh7.4 billion, up from Dh7.06 billion in the corresponding period in 2008.
The value of gold imported to and exported from Dubai rose by 53 per cent to $ 29 billion in 2008 against $ 19 billion in 2007. India was Dubai’s largest gold trading partner last year. In the first quarter of 2009, Pakistan and India were the top destinations for gold shipments from Dubai, while Switzerland and India were the emirate’s leading suppliers of gold.
