Current Market Scenario (3/1/2005)
The year 2004 was not a good one for the Middle East region on the whole. The constant price fluctuations had disrupted the market and left it in a state of shock and confusion. The higher oil prices, lower USD value and the constant threat of terrorism was playing into the mind of the people as a whole and gold market in particular. The most bewelding aspect of the price fluctuation was that it refused to stabilise at any given point of time, catching most traders with short position on its way up and than long position on its way down on more than a few occasions. Everytime the market believed that the price was expected to move in a certain direction came the news of either a terrorist attack or disruption in oil supplies and shortages and or comments about the US economy that made it look the other way.
So far, the year 2005 has been more auspicious as it has rung in with a blessing in the form of lower prices. What has really gladdened the market further is that the drop coincided with the start of the DSF shopping festival in Dubai, the Hajj pilgrimage season in Saudi as also the marriage season in India. Three events that are of utmost importance for jewellery sales. But in my view the icing on the cake was the mostly smooth passage of the Iraqi elections, opening up yet another lucrative market for the yellow metal in the region.
The almost constantly rising prices of 04 had meant that there was limited demand for physical in the form of Large bars, Kg bars or TT bars as most of the requirement was being replenished by the loads of scrap comming into the market, especially from Saudi. The sudden and mostly unexpected move south in prices from the very first week of Jan.05 caught the entire market unawares and with very limited available stocks. With much higher demand than had been anticipated and very little stock going around there was a virtual stampede for the yellow metal. To add to situation was the fact that most of the international suppliers were just getting back from their Christmas-New year end holidays. At this point none seemed to care about the highers premiums. How the wheels had turned within a few days.
Talking of Dubai, it is and has been a place of unlimited opportunities. To mark the 10th anniversary of the DSF shopping festival the Gold and Jewellery Group had put up a prize of 120 kilos of Gold where one lucky winner could walk away with as much as 100 Kgs. This promotion coupled with many other special offers and discounts helped the local market re-ignite the common mans interest in gold as an oranament as well as its importance as an object of financial security. The fact that the 100 Kg prize was evenually won by a 10-year-old girl only helped the cause of the jewellers here as it generated more free publicity worldwide and among the local residents than all the Amitabh Bachan promotions put together.
Each year the Saudi market waits for the Hajj pilgrimage season with bated breath and with around 3 to 4 people flocking to the Kingdom from all parts of the world for a short span of time it is not difficult to understand why. Apart from being a highly religious occasion, Hajj is also a time of great commercial activity. Like every year, even this year the Hajj has given a timely boost the the jewellers sales in Saudi, especially in places like Mecca and Medina which are the epi-centers of all activity.
What has overshadowed everything else though is the unusually higher demand for physical from Kuwait, which so far had been considered a small market. With the Iraqi election peacefully over more and more traders a willing to risk venturing into the yet unexplored Iraqi market. Early indications are that there is a huge appetite for jewellery specially bangles among the Iraqi women and I am sure that once a proper government is in place and the wheels of economy begin to move we shall see the actual potential of the Iraqi requirement.
The year 2004 was not a good one for the Middle East region on the whole. The constant price fluctuations had disrupted the market and left it in a state of shock and confusion. The higher oil prices, lower USD value and the constant threat of terrorism was playing into the mind of the people as a whole and gold market in particular. The most bewelding aspect of the price fluctuation was that it refused to stabilise at any given point of time, catching most traders with short position on its way up and than long position on its way down on more than a few occasions. Everytime the market believed that the price was expected to move in a certain direction came the news of either a terrorist attack or disruption in oil supplies and shortages and or comments about the US economy that made it look the other way.
So far, the year 2005 has been more auspicious as it has rung in with a blessing in the form of lower prices. What has really gladdened the market further is that the drop coincided with the start of the DSF shopping festival in Dubai, the Hajj pilgrimage season in Saudi as also the marriage season in India. Three events that are of utmost importance for jewellery sales. But in my view the icing on the cake was the mostly smooth passage of the Iraqi elections, opening up yet another lucrative market for the yellow metal in the region.
The almost constantly rising prices of 04 had meant that there was limited demand for physical in the form of Large bars, Kg bars or TT bars as most of the requirement was being replenished by the loads of scrap comming into the market, especially from Saudi. The sudden and mostly unexpected move south in prices from the very first week of Jan.05 caught the entire market unawares and with very limited available stocks. With much higher demand than had been anticipated and very little stock going around there was a virtual stampede for the yellow metal. To add to situation was the fact that most of the international suppliers were just getting back from their Christmas-New year end holidays. At this point none seemed to care about the highers premiums. How the wheels had turned within a few days.
Talking of Dubai, it is and has been a place of unlimited opportunities. To mark the 10th anniversary of the DSF shopping festival the Gold and Jewellery Group had put up a prize of 120 kilos of Gold where one lucky winner could walk away with as much as 100 Kgs. This promotion coupled with many other special offers and discounts helped the local market re-ignite the common mans interest in gold as an oranament as well as its importance as an object of financial security. The fact that the 100 Kg prize was evenually won by a 10-year-old girl only helped the cause of the jewellers here as it generated more free publicity worldwide and among the local residents than all the Amitabh Bachan promotions put together.
Each year the Saudi market waits for the Hajj pilgrimage season with bated breath and with around 3 to 4 people flocking to the Kingdom from all parts of the world for a short span of time it is not difficult to understand why. Apart from being a highly religious occasion, Hajj is also a time of great commercial activity. Like every year, even this year the Hajj has given a timely boost the the jewellers sales in Saudi, especially in places like Mecca and Medina which are the epi-centers of all activity.
What has overshadowed everything else though is the unusually higher demand for physical from Kuwait, which so far had been considered a small market. With the Iraqi election peacefully over more and more traders a willing to risk venturing into the yet unexplored Iraqi market. Early indications are that there is a huge appetite for jewellery specially bangles among the Iraqi women and I am sure that once a proper government is in place and the wheels of economy begin to move we shall see the actual potential of the Iraqi requirement.