JEDDAH, 22 March 2008 — Despite reports last year of a 15-percent rise in demand for gold in the Kingdom, local jewelers have seen a dramatic drop in sales as a result of high prices. They say customers are selling rather than buying to profit from the price hike.
“The increase in prices compared to last year has caused sales to drop by almost 70 percent,” said Mohammed Abdullah, a jeweler at Jeddah International Market.
The price of gold rose to $984 an ounce at the beginning of March with local traders fearing prices will continue to increase. Although prices have slightly eased recently, it is expected that prices will hit the $1,000 mark soon.
“Middle income earners are selling rather than buying to gain profit,” said Abdullah. “Most of our customers buy gold and jewelry for personal use rather than as a form of investment. We hope prices will drop but in view of what is happening with the market’s fluctuations, I don’t believe this will be the case,” he added.
Abdullah’s view is shared by Saeed Aseeri, a neighboring jeweler, who pointed out that the price of gold has increased dramatically in the past five months. “I don’t think that the price is going to drop at the moment. If there is a decrease, then it won’t be before a year from now,” he said, adding that he expects the price to hit the $1,000 mark soon.
Saeed said people are selling rather than buying and that sales have not been greatly affected thanks to customer loyalty.
Hassan Aseeri, another gold shop owner, who has been trading for over 10 years, told Arab News that the hike in prices has not affected his sales that much. “Our sales dropped only five percent compared to last year,” said Hassan, adding that he believes gold prices will continue to increase but not at the moment. “There will be no drop for the moment.”
For ordinary people, the price hike is very much a cloud with a golden lining.
Umm Hasan, a housewife who occasionally buys and sells gold, said there is profit to be gained from it. “I took advantage of the gold price rise and sold a golden necklace gaining a good profit. I always buy a lot of gold when prices are low, even if I don’t wear it all, and sell when prices rise,” she added.
Sometimes she sells to her friends. “I have sold my gold if I needed the money or if I have a financial emergency,” she said.
Umm Ammar, a mother of three, also agrees that gold is a very attractive means of earning money. “I gained profit from the high gold price. I urge everyone to sell their gold now because gold prices might drop in the near future,” she said.
