Gold retailers in the United Arab Emirates have to be more versatile with their products to avoid falling sales, a senior industry official said on Monday, defying retailers' complaints that the booming gold price has deterred customers.
"Retailers obviously do not have a challenge, they just need to change the shelf line to reflect 2011," Ahmed bin Sulayem, executive chairman of Dubai Multi Commodities Centre (DMCC) told reporters at a press conference.
To raise sales, retailers need to catch up with changes in the market, Sulayem said, adding that Dubai's jewellery designs have a shelf life of three to four years and products older than that should be changed.
"[Jewellers] can remanufacture it, or send it to refineries or sell it as gold bars, if gold bars are going really higher," he said.
Sky-high gold prices have deterred customers in Abu Dhabi and in Dubai, major consumption centers, prompting consumers to shift to silver.
Bullion prices surged some 40 percent this year to hit a peak in September above $1,920 an ounce before dropping sharply.
Retailers asked for support from the Dubai government but Sulayem believed they do not require much government interference.
"The fact that they're still here after the credit crunch and recession tells me they know what's happening in the market. They know how their clientele operates and what they need to do," he said.
In March, the World Gold Council shut down its office in the UAE, citing a strategic review of its operations. But traders said rising gold prices hitting the retail industry was the reason behind the Council's move.
Branded as the city of gold, around 17 percent of the world's gold trade passes through Dubai, while the emirate's demand accounts for about 3 to 5 percent of global consumption, Gerhard Schubert, head of precious metals at Emirates NBD, said.
Rising uncertainty about the health of European and US economies and disappointment in traditional investments such as currencies have prompted customers to increase their physical gold purchases, Schubert said.
"The world, over the next three to five years, is clearly looking towards Asia. And what better place to be than at the crossroads between West and East. I think Dubai has a great potential there."