NRIs in Dubai sell gold amid escalating Israel-Iran war to secure cash
Dubai | Mumbai: Some of the trusted, unbranded jewellers in Dubai Gold Souk are witnessing a stream of customers walking in every day to sell gold. Some are offering jewelleries, some swapping gold bars for cash - quietly accepting discounts the buyers quote. Many among them are men and women of Indian origin.
As the Israel-Iran war intensified on its tenth day, many NRIs are paring their gold holdings.
At least four retailers ET spoke to confirmed that more than 100 such sellers visit daily ever since Dubai was caught in the crossfire. Jewellers say they are buying about a kilogram a day as expatriates liquidate gold to create cash cushion and remit funds home. The moneyed lot park the cash with overseas banks.
"There are buyers as well, but selling goes on which is somewhat unusual," said an executive of a large gold store in Bur Dubai.
The stores are buying at 4-5% discount while the top branded ones are only buying back jewelleries they had originally sold.
Also Read: Dubai hotel rates plunge as Middle East conflict stalls bookings
MONEY MOVES FASTER THAN GOLD
"It's normal for people anywhere to sell gold in times of heightened tensions," said Mohanad Yakout, senior analyst at SCOPE Markets, a global broker. Following global cues, UAE prices fell 10 dirhams (AED) a gram on Monday morning with 24k gold quoting at Dh 613.25 per gram.
Unlike money which can be moved at the click of a mouse, it's impossible for jewellery to freely cross the border given the baggage restrictions. "Even in a soft market, gold is easy to sell. Understandably, some NRIs owning quite a bit of gold and anxious to diversify assets, are selling to hold money abroad with USD appreciating. More so, as gold cannot be freely taken out," said Rajesh Shah, partner at Jayantilal Thakkar & Company which is advising several HNIs and NRI families in UAE.
Jewellery carried on the person or in baggage can be brought back without duty, subject to verification. Beyond this, NRIs are allowed duty-free clearance up to 40 gm and 20 gm for a female and male passenger respectively. Beyond this, a passenger can carry up to a kilo by paying 5% duty.
"Stores are buying for AED 583-589 per gram. We are advising sellers to exchange gold bars for 22 carat gold jewellery which could be easier to carry back home," said another executive at a store in Gold Souk Extension.
Since many sellers don't have invoices, we are taking approvals from the government, said a store attendant in Deira.
Also Read: Dubai index slides 4% as oil soars on escalating Iran conflict
HEDGING THE RISKS
A weaker rupee-which slipped to 25.02 against dirham (which is pegged to USD) from 24.85 on Sunday-is also promoting some to remit the sale proceeds to India.
According to veteran gold analyst Bhargav Vaidya, "People buy gold over time, often not disclosing actual holdings to everyone in the close family circle. If they fear they may have to move out, it's natural to sell some of it. I feel discounts would not be steep as that would trigger demand from other locations. There could be other reasons to sell as gold is probably the only asset which can be sold effortlessly in the UAE today."
Jewellers, however, have to guard against the downside of stocking gold. "Most buying gold would sell it in the futures market to avoid losses in such volatile times. You can't easily ship it out, and even if flights fully resume soon, why risk a speculative position," said Vaidya.
Some like Anvar, a key jewellery store in Dubai's Gold Souk, are selling at a discount of 3 AED on 10grams and 5 AED discount on 50 grams of gold. Similarly, Aliya Jewels is selling gold at a discount of 2 AED. Branded stores like Tanishq, Malabar, or Joyalukkas are, however, offering gold only at the prevailing market prices.
As the Israel-Iran war intensified on its tenth day, many NRIs are paring their gold holdings.
At least four retailers ET spoke to confirmed that more than 100 such sellers visit daily ever since Dubai was caught in the crossfire. Jewellers say they are buying about a kilogram a day as expatriates liquidate gold to create cash cushion and remit funds home. The moneyed lot park the cash with overseas banks.
"There are buyers as well, but selling goes on which is somewhat unusual," said an executive of a large gold store in Bur Dubai.
The stores are buying at 4-5% discount while the top branded ones are only buying back jewelleries they had originally sold.
Also Read: Dubai hotel rates plunge as Middle East conflict stalls bookings
MONEY MOVES FASTER THAN GOLD
"It's normal for people anywhere to sell gold in times of heightened tensions," said Mohanad Yakout, senior analyst at SCOPE Markets, a global broker. Following global cues, UAE prices fell 10 dirhams (AED) a gram on Monday morning with 24k gold quoting at Dh 613.25 per gram.
Unlike money which can be moved at the click of a mouse, it's impossible for jewellery to freely cross the border given the baggage restrictions. "Even in a soft market, gold is easy to sell. Understandably, some NRIs owning quite a bit of gold and anxious to diversify assets, are selling to hold money abroad with USD appreciating. More so, as gold cannot be freely taken out," said Rajesh Shah, partner at Jayantilal Thakkar & Company which is advising several HNIs and NRI families in UAE.
Jewellery carried on the person or in baggage can be brought back without duty, subject to verification. Beyond this, NRIs are allowed duty-free clearance up to 40 gm and 20 gm for a female and male passenger respectively. Beyond this, a passenger can carry up to a kilo by paying 5% duty.
"Stores are buying for AED 583-589 per gram. We are advising sellers to exchange gold bars for 22 carat gold jewellery which could be easier to carry back home," said another executive at a store in Gold Souk Extension.
Since many sellers don't have invoices, we are taking approvals from the government, said a store attendant in Deira.
Also Read: Dubai index slides 4% as oil soars on escalating Iran conflict
HEDGING THE RISKS
A weaker rupee-which slipped to 25.02 against dirham (which is pegged to USD) from 24.85 on Sunday-is also promoting some to remit the sale proceeds to India.
According to veteran gold analyst Bhargav Vaidya, "People buy gold over time, often not disclosing actual holdings to everyone in the close family circle. If they fear they may have to move out, it's natural to sell some of it. I feel discounts would not be steep as that would trigger demand from other locations. There could be other reasons to sell as gold is probably the only asset which can be sold effortlessly in the UAE today."
Jewellers, however, have to guard against the downside of stocking gold. "Most buying gold would sell it in the futures market to avoid losses in such volatile times. You can't easily ship it out, and even if flights fully resume soon, why risk a speculative position," said Vaidya.
Some like Anvar, a key jewellery store in Dubai's Gold Souk, are selling at a discount of 3 AED on 10grams and 5 AED discount on 50 grams of gold. Similarly, Aliya Jewels is selling gold at a discount of 2 AED. Branded stores like Tanishq, Malabar, or Joyalukkas are, however, offering gold only at the prevailing market prices.
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