Push for lighter designs to maintain demand
Gold manufacturers are producing pieces that weigh less to maintain retail demand for gold in light of surging prices.
“At a retail level we’ve seen some difficulties when gold prices move up. It has an impact on retail sales and we have seen phases of sales slowing down when gold prices jump up and down by hundreds of dollars,” says Anan Fakhreddin, chairman of the Dubai Gold and Jewellery Group and chief executive officer of UAE-based jewellery retailer Damas.
According to Fakhreddin, there are now gold pieces available on the market that weigh between 3-4 grammes and gold sets that weigh 10-11 grammes.
“We have never seen that in the past. The lightest weight for a set in the past was 20-22 grammes so we’re less than half now,” says Fakhreddin.
This trend is likely to continue as gold prices are expected to surge once again in the first quarter of 2012. Analysts predict highs of $2,200 an ounce.
“Every time there is a price hike, we lose certain consumer segments, those that cannot afford it, but the appetite for gold grows with other sectors so overall the business performs well,” says Fakhreddin.
“If the US election ends the stalemate and policies are made and the European issues are resolved or become clearer in the next 10-11 months, it will affect the gold price. The second half of 2012 will be an option-led exit strategy where you buy the rights, but do not have to sell,” says Gerhard Max Schubert, head of precious metals, consumer banking and wealth management at Dubai-based Emirates NBD.
A MEED Subscription...
Subscribe or upgrade your current MEED.com package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.