Local bullion traders and jewellers who, obviously, have much at stake if gold prices keep taking a beating, do not believe the downward trend would continue longer than a few days or weeks at the most.
“It’s a temporary phase, and we believe that in the worst scenario prices may plummet to QR150 a gram (of pure, 24-carat gold) only to surge again,” said a bullion trader not wanting his name in print, insisting that this was his personal opinion.
It is interesting to note that while gold jewellery is available aplenty in local shops, buyers are having a hard time accessing gold bars and coins that come in different sizes and are popular investment avenues for a vast majority of particularly limited-income Asian and Arab expatriates.
The bars that are made of 24-carat gold are available in various sizes beginning from five, 10, 20 and 30 grams to 50, 100, 116 grams and a kg and even 12kg.
Coins are made of 24 and 22 carats and come in different sizes, the most popular being five, 10, 20 and 30-gram ones, according to bullion traders.
Some known outlets that sell bars and coins have been reporting shortages of stocks off and on over the past few days since gold prices began plummeting much to the chagrin of enthusiastic buyers, many of whom said they had to return dejected.
Some skeptics say they suspect the outlets are fooling them and reporting shortages to hoard stocks to offload when prices rebound.
Market sources, however, reject such accusations as baseless.
They say it only reflects the frustration of those who want to buy coins and bars but are not able to due to quick uptake of stocks owing to frenzied demand.
An outlet said in just two hours it sold out some 800 gold bars of standard size (116 grams) some two days ago.
As for coins, its stock of some 2,000 of various sizes were gobbled up by gold-crazy buyers in just a few days.
Another outlet said heavy demand forced it to procure two fresh consignments together weighing some 40kg but the entire stock was exhausted in a short span of time.
Jewellery shops do have bars and coins as well but are selling at relatively higher prices. At a shop on Thursday, for example, a 116-gram bar was sold for over QR19,700 when the actual market rate was around QR19,000, said buyers.
However, arguably none of them lodged a complaint with the Consumer Protection Department of the Ministry of Business and Trade, the state-run consumer rights’ watchdog.
As for the falling gold rates, most in the bullion and jewellery trade — and surprisingly, also a majority of people — here appear to believe that the prices would rebound sooner rather than later.
ut that doesn’t seem to represent the broader view. Market analysts and observers who have seen gold behaving unpredictably over the past several years, are of the opinion that this is not the time a trend can be predicted.
“We must wait and watch,” said an analyst on grounds of anonymity. But he preferred not to comment when prodded how long one should wait to safely forecast a trend.
A cursory look at the situation as regards gold and jewellery trade worldwide suggests the yellow metal isn’t becoming cheaper only because Cyprus is offloading 10 out of a total of its 13.9 tons of bullion reserves to help meet its bailout bill that runs into billions of dollars.
What Cyprus would get after selling gold is $466m, nearly 30 to 35 times less than its bailout bill. However, those who see the current slide in gold prices linked to the development in Cyprus, argue that other European countries like Greece and Portugal might also have to resort to a similar sale since they are faced with equally challenging debt-related woes.
But there are others who see the improving US and Japanese stocks as responsible for luring shark and institutional investors back to the paper assets, arguing that a staggering $60bn has been pumped into US mutual funds and ETFs (exchange traded funds) that hold US stocks.
They believe surging equity markets would attract more of such huge funds over time, ending the era of gold as safe haven. The cycle of busts and booms must continue, they insist.
