DUBAI // Jewellery shops face unexpected demand for gold bars just days after prices peaked at a high of more than US$1,780 (Dh6,537) an ounce.
Sellers said they were rationing their stock and turning away customers in anticipation of higher prices.
"There are more sales even though the prices are high," said Christian Gueit, the Middle East general manager of Ex Oriente Lux. The firm has installed eight gold ATMs in the UAE.
"People are buying both 100 grams and 2.5 grams of gold bars from the machines. They will continue to buy gold. Our forecast is that the prices will hit $2,000 an ounce," he said.
Some stores were refusing customers who wanted to buy more than one bar at a time. This had resulted in a shortage, shoppers said.
"When a customer asks for five bars, we may give only one because even we need to hold back a little," said Dilip Raj, the owner of Al Rafeh Jewellery in Deira. "Every minute, the rate is going up. Even wholesalers are reluctant to sell and that's why there is a shortage. This may be an artificial shortage of gold bars because nobody wants to part with it."
"There is a shortage in the market," said Thomas Scaria, the head of corporate finance at the Joyalukkas Group. "We have seen a 30 per cent increase in sales. The appetite for gold has increased."
Mr Scaria said that with customers lining up to invest in bars, the group was doubling efforts to restock. "We have a direct tie-up with a refinery and are quickly replenishing our stocks. We did not expect this demand."
His company is experiencing an increased demand for all types of gold.
But traders said customers were not opting for gold jewellery.
"People are buying mainly bars," said Anil Vaya, the manager of Mohanlal Vallabhdas and Bros, a gold shop in Dubai. "They are buying in huge quantities because it is a short-term investment."
He said he sometimes sells as many as 10 bars a day.
The lack of interest in jewellery was evident at the Gold Souq in Deira, which looked empty yesterday except for tourists. "The prices are incredibly high," said Suzanne Caroll, an Australian visitor. "I probably wouldn't mind buying a hollow bangle, but it's too expensive."
Maitri, a college graduate, said this was in response to global events.
"Unless there is an important occasion, I wouldn't buy now," said the Indian, who spent more than Dh10,000 on a 60-gram gold bar last December.
"We used to buy it for Eid and for occasions," said Fathiya Al Rahama, an Emirati. "Now we don't even wear it for weddings. It has become very expensive, especially since last year."
Shops at the Gold Souq were optimistic of business picking up soon.
"Our sales have fallen by almost 50 per cent in the past week," said Mushtaq Mohammed, a salesman at the Nadia Gold Shop. "It is also due to Ramadan. But we hope that will change soon."
* With additional reporting by Amna Al Haddad