Dubai’s gold market is once again under the microscope, following a near-Dh500-per-gram clip by prices of bullion stocks in recent days. Retail gold prices have plummeted from the May peak levels, with the different purities of gold traded at Dh488 per gram to Dh503 per gram and Dh450 per gram to Dh466 per gram, respectively, of 24K and 22K gold, and its fluctuations in the market.
Much of the drop has been attributed to the drop in inflation worries and a strengthening U.S. dollar, which have weighed on gold prices worldwide. The price reductions may offer a buying opportunity for Dubai’s shoppers, particularly those in the market to buy for the summer vacation, wedding, or investment.
With all that being said there are a number of considerations before heading to the nearest jewellery store or to the famous Deira Gold Souk.
1. Don’t Focus Only on the Gold Rate
The most common error that many buyers make is believing that they are able to buy jewellery at the gold price quoted.
The Dubai Gold & Jewellery Group publishes a daily rate, which represents the price of raw gold. But there are several other costs to consider when it comes to buying a necklace, bracelet or ring. These are generally the UAE VAT (5%), design cost and making charges.
The amount of charges can differ significantly for each piece. A straightforward chain could be bought at moderate costs and also may be a higher priced excessive in a complicated bridal jewellery section.
When deducting the price ask retailer for a detailed breakdown of the price including gold weight, making charges and VAT. Also, charges on gold are invariably negotiable, particularly during off-peak hours of the trading season, and buyers may be able to benefit from even greater savings than the price cut in the gold.
2. Choose the Right Purity for Your Purpose
With the recent drop in the gold price, investing in 24K is more alluring than ever, but it’s not wise advice for jewellery investors.
Pure 24K gold is so soft that it can bend or scratch one very easily, and is therefore difficult to use for the everyday wear. If you value purity and longevity over adorability, than 22K and 21K gold are probably your best options for consumers. They are typically found in rings, bangles and bridal sets since they are able to tolerate regular wear and continue to have a high gold rate.
However, when investing, instead of buying jewellery make sure you buy 24K gold coins or bars. Investment-grade gold normally has very little making charges and is likely to have a much better re-sale worth than designer gold.
3. Leverage VAT refunds for tourists
It may even be a better deal for international visitors to buy gold in Dubai.
The UAE introduced a 5% UAE VAT rate on the sale of jewelry; however, many visitors might be able to reclaim a significant amount of this tax prior to their departure from the country. The following steps should be taken to qualify:Ensure that the retailer registers the purchase under the tax refund system with information from the buyer’s passport.
Also, see tourist implications for customs legislation in their country of origin. Importing large amounts of gold without knowledge of the import limits may lead to duties, fines or delays at arrival airports.
When is it the right time to buy?
The correction has provided some traders waiting on the sidelines with one of the best entry points available in the past few weeks. No one can forecast exactly what will happen to gold prices tomorrow but today’s lows mean they should have an improved chance than the record levels seen earlier this year.
The secret is in knowing how to look past the price tag, knowing the making charges, selecting the appropriate level of purity in a good idea, and $64,000 tax benefit you simply need to avail. With this dip on the right hand, it may mean buyer savings on things they are ready to buy, as well as jewellery.
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