Although shoppers in Dubai are snapping up cheap gold, global demand for the precious metal has tumbled to a six-year low. Sara Hemrajani looks at why investor appetite is waning.
Traders in Dubai's gold souk say they're seeing brisk business as shoppers snap up more jewellery. SOUNDBITE: Fouad Thabet, customer, saying (Arabic): "The fall in price has increased people's appetite to buy gold especially since the price fall has happened in the summer, the season of celebrations and weddings so people are buying a lot of gold." Although gold has rallied this week on the back of China's currency devaluation, the metal is trading at its lowest level in five-and-a-half years. But not everyone is taking advantage of the price drop. According to the World Gold Council, global demand tumbled to a six-year low in the spring quarter of this year. That's as buyers in China and India - the leading gold markets - cut their spending. Reuters senior precious metals correspondent, Jan Harvey. SOUNDBITE: Jan Harvey, Reuters senior precious metals correspondent, saying (English): "Indian demand was disrupted in the last quarter by severe weather which caused a drop in purchasing in rural areas. Chinese demand has also been curbed by some of the volatility we've seen on the stock markets." Another price dampener is the prospect of the first U.S. rate hike in nearly a decade. SOUNDBITE: Jan Harvey, Reuters senior precious metals correspondent, saying (English): "The price weakness trend is expected to continue this year, and that is mainly because people are still expecting the Federal Reserve to lift interest rates this year. That could have quite a big impact on gold. Gold doesn't have a yield, so if interest rates rise then that tends to weigh on the metal." But shopkeepers in Dubai could be kept busy - as the World Gold Council expects consumer demand to pick up later this year.