KUWAIT: Three months ago, the price of this precious yellow metal came down a considerable level in the world market. The reason, according to some analysts, was connected to the improving US economy. The collapse in gold prices – from a peak of $1,900 an ounce in August 2011, to under $1,250 at the beginning of July 2013 – represents a vote of confidence in the global economy. During a downward spiral, customers took advantage of the decline. Although it was short-lived, it was enough for some people to buy and get a pretty discount on the metal – especially Indians who love and adore gold. “It was a short but really great relief for many Indians who are investing in gold crazily,” said P Pouldas, owner of Plaza Atlas, International Jewelry.
He said, the downward trend can also be attributed to the fact that gold in the United States was sold to invest in the stock market and other economic prospects. “Usually if the economy is improving, the overall attitude of investors is positive to push the trend forward. So, if they have savings in gold, they will sell it and invest it in the market,” he added. But it was short-lived. Now, the price is climbing rapidly and many blame uncertainty in the Middle East for it. “We are witnessing an upward trend, mainly because of rumors of an impending war,” he said. “At a time like this, people don’t want to invest.
They want to hold on to their money until the rumors are confirmed. This will automatically affect our buying and selling,” he explained. For some Indians like Felomina, the rise in gold price spells bad news. “I love to invest money by buying gold. But the price now is not what it was four months ago. It’s really expensive and not affordable but I will still buy, albeit for a smaller amount, for my daughters,” Felomina admitted she’s been buying gold for herself and for her children. “I have three daughters and the only reason I have been working so hard is for us to save some money and buy gold for them.
I have to invest for them, because it is our custom to decorate our daughters with gold during their wedding, so that they can have a better life,” she said. Felomina works as a secretary at a private firm in Kuwait City. According to her, six months ago, the Indian government had already implemented a 10 percent tariff on all gold purchases. “If you buy gold now in India, it is far more expensive than what it was six months ago because our government imposed a tax on gold,” said Felomina, who is originally from Kerala but now lives in Goa.
Arabs are not that fond of buying gold though they do buy it during holidays like Eid and on other special occasions. Indians, however, according to Pouldas, will continue to purchase gold regardless of price. “They will continue to buy gold because the culture demands it.
They usually save for the future. During hard times, they can easily go to the bank and get money, so even the poor will make sure they have some gold reserve,” Pouldas added. Prices of gold in Kuwait market are heavily dependent on the international price tags. On the onset of the global financial crisis, the price of gold has often been portrayed as a barometer of global economic insecurity. Gold has hit a record price of $1,900 an ounce.
The price tag though will increase dramatically when the precious metal is turned into ornaments like necklaces, rings, earrings, bangles or armbands where craftsmanship is usually counted as ‘making charges’.
By Ben Garcia