Record gold prices scare off buyers

The price of gold in the run-up to Eid al Adha means many souqs and jewellers in Abu Dhabi are unusually quiet.

Eid is usually a popular time of year for buying gold, but the precious metal has reached record prices, putting many shoppers off.

ABU DHABI // This time last year, it would have taken up to an hour to find a parking space at the Madinat Zayed Gold Souq. But yesterday, the day before the eve of Eid al Adha, there was no such problem.

As the price of the precious metal remains high after hitting record levels twice this week alone, shoppers have been put off buying gold as gifts this year. Some people are even selling their old jewellery to cash in on the recent rises. Yesterday, the souq at Madinat Zayed was quiet. Shoppers were not buying larger accessories and retailers were growing worried that sales during this Eid might fall short of already low expectations. "Usually I buy at this time of year," said Alhan Jaraki, a Lebanese expatriate visiting the souq yesterday.

"It is much less busy now, and some shops are trying to reel you in with discounts," she said. "But the price is still high. "I may sell some of my old gold, which I have with me here, because of this good price. If I see something I like, I might exchange the older pieces for some new earrings for myself." Sahar Mohammed, from Egypt, said the high prices meant the curtailment of a personal tradition.

"I have always bought gold during Eid but this year it is far too expensive," she said. "I am waiting for the price to come down, so today I am just window shopping here. Every year before this, I have bought gold." It seems she may be waiting some time yet. Just yesterday, gold struck a record high for the second time this week, rising above US$1,178 (Dh4,327) an ounce. "If the price stays the way it is, we will have to figure out something. We might have to diversify," said Riyad Musbah, a salesman with his family's jewellery business at the souq.

"The mall isn't as packed, parking is much easier and it is definitely less busy. Last Eid, people were buying larger pieces but this year some customers have switched to smaller things like bangles for their children. "We are fortunate because most of our customers are locals, and they are less affected by the price." Earlier this week, the World Gold Council released a report saying that if gold continued to trade at record levels, the pressure on UAE jewellers, especially in Dubai, was likely to see several shops close.

UAE gold demand fell 38 per cent in the third quarter of this year, compared with last year, it said. Tushar Patni, the owner of a jewellers in Abu Dhabi and a member of the emirate's Gold and Jewellery Group, said overall sales for November were down by 50 per cent. However, he said some customers had started buying again because they anticipated even higher prices to come. "They're expecting it to go up even more than this," Mr Patni said. "That's why the buying has increased."

This month's sales at the Pure Gold group of jewellery stores, meanwhile, are 40 per cent down on last November, while in October they were down 60 per cent. However, Firoz Merchant, the chairman and founder of Pure Gold, said Eid looked more promising. "The consumers, before, they were very confused about the price. Now they understand and have accepted it, and are starting to buy." Elsewhere in the capital, some retailers of other goods were also more upbeat.

V Nandakumar, the corporate communications manager for Emke, which runs the Khalidiyah and Al Wahda malls, said its shopping centres were doing well in the run-up to Eid. "Right now, there is a huge rush," he said. "I don't see any big difference from last year - it's looking like a decent crowd." Reem Ghneim, the manager of a sweet shop on the Muroor Road, also said sales were better than last year.

"This year has been much better than last - it's a good season for me. People were a lot more scared about the recession last year, I feel. "This year their confidence has returned and they're making a point of purchasing more items for Eid. This Eid al Adha has been better than Eid al Fitr." The India-born Shaheen el Ahi, the manager of a shop in Abu Dhabi Mall, had also noticed sales picking up.

"This year's Eid has been a bit busier than last year's. In general business has gone down thanks to the recession, but it's slowly picking up as confidence returns and, thanks to Eid, things have been better for us recently." However, that was not the case for all retailers. Bashir Kalakkal, also from India, manages an electronics store in the mall. He said had not seen a major increase in business.

"Last year, overall, was a better year for us, we haven't had a significant change in business for Eid. But, yes, things have been just a little better this week for Eid. Business has been relatively stable." @Email:[e-mail]