United Arab Emirates’ Gold market faces continuing challenges
DUBAI (Scrap Register): Many of the challenges for the United Arab Emirates’ gold market last year have carried over into 2019, said analysts with Metals Focus after attending a precious-metals conference in the country.
Factors hurting the local gold-jewelry market included the introduction of a 5% value-added tax at the start of last year, the high costs of doing business, consumers’ changing buying behavior, increasing competition from consumer electronics and fashion jewelry, and job-security concerns, Metals Focus added.
The levying of VAT hit tourist buying from India, as the arbitrage between there and Dubai collapsed. The issue of ongoing job insecurity was one of the main factors for purchases by locals and rising dollar gold prices were also seen as a clear negative. Thankfully, falling rental prices offered some relief on household budgets.
The UAE approved refunds for tourists of most of the VAT. However, many buyers from India are reluctant to collect on this because they want to remain anonymous.
"Their chief concern has been that their personal information would be shared with Indian tax authorities and their gold seized at the border entry points," the consultancy said.
In addition, their purchase could lead to scrutiny of their wealth versus reported income. Still, despite the challenges, Metals Focus is "cautiously optimistic" that Dubai will remain a key Middle East market as "industry participants increasingly try to devise ways individually and through cooperation to respond to some of the challenges that the whole industry faces," Metals Focus noted.