Retailers See Greater Interest In Silver
DUBAI, May 11, (RTRS): Retail gold sale volumes in Dubai and Abu Dhabi dropped by around 10 percent in April year-on-year as high prices deterred consumers and turned their interest to silver, retailers said on Wednesday.
Retail gold sales in Dubai, branded as the city of gold, may have lost their lustre as high prices of the precious metal kept buyers at bay.
“People only buy gold on a need-to basis these days, for weddings or special occasions when they really have to,” said one gold salesman in Dubai’s old gold souk.
“Otherwise now the demand is stronger for retail silver,” he added.
April sales volumes were also down around 10 percent in Abu Dhabi, capital of the UAE, retailers said.
“Sales volumes are a little lower in April compared to last year, but the value is sales is higher because of the price,” said Tushar Patni, director of Ajanta Jewellers, one of the largest retailers in the emirate.
On Wednesday spot gold rose half a percent to $1,521.96 an ounce in a fourth day of gains after falling more than 4 percent last week.
From the investment side, volatile prices of the yellow metal drew in Gulf traders’ interest, said Ramkumar Chandrasekharan, an analyst and trader at Al -Bogari Islamic Gold DMCC in Dubai.
“Steep sell-offs followed by steep recoveries always flush out the retail traders from the market, and the position gets shifted from weaker hands to stronger hands,” he said.
“Unsettling and volatile move could be seen soon, as we see gold is ascending in a grinding manner,” he said, adding that whenever prices rise, then there are sales.
Value
Spot silver jumped more than 2 percent to $39.24 an ounce on Wednesday, rebounding after losing more than a quarter of its value last week in the worst week for commodities since 2008.
Anecdotal evidence suggests many retailers have introduced more silver products into shops as a means of boosting sales.
“The volumes of silver buying are much higher than gold in the retail sector mainly because silver is cheaper, and in the past six months the price of silver has doubled, so there are bigger profits to be made,” said Patni.
In March, the World Gold Council shut down its office in the UAE, citing a strategic review of its operations.
But traders said it had to do more with the fact that rising prices had badly hit the retail industry in the country.
Meanwhile, Gold prices were little changed above $1,510 an ounce on Tuesday, retreating from earlier highs after the euro edged lower amid conflicting reports on a potential new aid deal for Greece, and as oil prices fell.
While concerns over Greece’s debt crisis and similar problems elsewhere in the euro zone are expected to insulate the price from any severe declines, for the moment any positive impact they may have is being tempered by currency effects.
Spot gold was bid at $1,512.80 an ounce at 1404 GMT, against $1,513.15 late in New York on Monday. US gold futures for June delivery were up $9.70 an ounce at $1,512.90.
“(We are seeing) really narrow trading today, consolidating after the latest rebound, with little changes on the currency market,” said Andrey Kryuchenkov, an analyst at VTB Capital.
The euro fell against the dollar, surrendering early gains in volatile trade on Tuesday.
The single currency touched the day’s high after Dow Jones News reported Greece may receive aid totalling 60 billion euros as soon as June, but pulled back after Greece denied the report.
The fragility of Greece’s finances as well as the impact of more potential bailouts for other indebted euro zone members was expected to support gold, in spite of a continued decline in global holdings of the metal in exchange-traded funds.
Reflecting the discomfort among investors over Greek debt, gold priced in euros rose 0.1 percent to 1,054.26 euros an ounce, nearing four-month highs above 1,060 euros.
Gold fell by more than 4.5 percent last week in its largest weekly slide in two years, caught up in a storm of selling that battered the entire commodity complex.
“While some sense of normality has been restored to precious metals markets following last week’s beating, volumes are very light and as such the potential for exaggerated price moves is quite high,” said UBS strategist Edel Tully.
“Gold looks quite comfortable at $1,500, and would profit from any escalation in concerns over Greece’s debt sustainability. In this climate it is also worth paying attention to the euro price of gold,” she said.
