Demand for gold jewellery has slumped ahead of the traditional buying season for the Indian community, say retailers.
On Friday afternoon, the Deira gold souq wore a deserted look compared to Akshaya Trithiya in previous years, considered an auspicious day for Hindus to buy gold and start new ventures.
Some Dubai retailers whose main clientele are Indians, said sales had fallen by as much as half because of restrictions on carrying gold to India.
Volatility in prices and lack of liquidity among buyers have also affected sales, said Raju Thaker, the manager at Navrang Jewellers, which has had a presence in the souq for 40 years.
“A stable government in India and good monsoons could revive sales,” he said.
In April, which precedes the usual gold-buying spree during Akshaya Trithiya and for the upcoming wedding season in India, sales dropped by 20 per cent year-on-year at Navrang Jewellers.
Rural India accounts for the majority of demand, and good rains also mean higher demand for gold, which is perceived as a security during hard times.
Meanwhile, gold prices last month were 20 per cent lower compared to April 2013. But despite lower prices customers stayed away.
The Indian government has restricted gold imports to 1 kilogram per person to check the increasing trade deficit. On arrival, the visitor is required to pay 4 per cent duty for gold bars, and 10 per cent for jewellery.
Non-resident Indians should have stayed abroad for at least six months or more to carry these quantities.
Importers in India also need to export at least a fifth of their gold imports. Because of the curbs, India’s current account deficit is expected to fall below US$40 billion for the fiscal year ending March 31 from $88bn the previous year.
Sunil Bhatija at Popley Kewalram Jewellers, another jeweller who has been in the souq for about 13 years, said sales fell by at least half from April last year.
And in Deira’s Gold Land, a shopping complex packed with stores selling gold jewellery just a few blocks from the gold souq, shop manager Benny George at Chemmanur Jewellers said consumers had been only buying light jewellery unlike previous years.
Pure Gold Jewellers, which has 40 stores in the UAE, however, seems to have bucked the trend. The company said there had been an increase in demand but declined to give a figure.
And the restrictions have had “no adverse effects. In fact, there is higher demand of gold from Dubai within the stipulated limit”, according to Karim Merchant, the chief executive and managing director of Pure Gold.
The company plans to invest Dh500 million and open two more stores in the UAE this year.
ssahoo@thenational.ae
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