News Column

Dubai's lustre awaits more Indian jewellers

February 24, 2014

Manoj Nair Associate Editor

Dubai: UAE's gold and jewellery trade will soon have to find space for more players, brought on by another recent change in India's regulations governing bullion imports into that country.

"There is speculation that some leading jewellery chains will soon be launching their operations here and even one owned by an Indian conglomerate," said Shamlal Ahmad of Malabar Gold and Diamonds. "The UAE and the Gulf are the only natural markets for them to expand into if they are to meet the requirement that 20 per cent of what they buy as bullion in India should be exported."

Already, one retailer, Kalyan Jewellery, made a heady entry by opening six locations in one day. Not just that, they painted the town and the air waves in their colours to make the opening statement.

Dubai's jewellery retailers had a good start to the year, surfing through the DSF campaign by selling more than seven tonnes and helped by gold price that remained in the sub-$1,250 (Dh4,591) an ounce range. But post the DSF, demand has tapered off by five to 15 per cent as prices suddenly shot up to more than $1,300 an ounce, which took many by surprise.

"It will take a little time for shoppers to absorb the higher level and there's no guarantee it would," said Ahmad. "It's unlikely that gold prices can remain anchored to lower than $1,200 [$1,180 was the lowest it fell to in the last three years but made a recovery pretty sharply] as mines would find that uneconomical. Even at $1,200 an ounce, some mines had closed down operations."

Cyriac Varghese of Sky Jewellery agrees that the period immediately after a DSF has historically seen sales lose some of its lustre.

"The trade does not see as the $1,300 mark as leading to shoppers staying away for a longer time frame," said Varghese. "Local consumption was fairly high at the $1,500-1,600 an ounce range last year."

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Source: Gulf News (United Arab Emirates)

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