Coronavirus: Distressed expats in UAE sell small quantities of gold amid cash crunch
Gold price rose slightly to $1,707 an ounce on Wednesday evening.
Indians' traditional faith in gold and their penchant for the yellow metal is coming handy now, especially for expats facing a cash crunch.
Restrictions imposed due to the spread of the Covid-19 coronavirus has left several expats either unemployed or facing a substantial cut in their salaries. As an emergency measure, expats, especially those from the Subcontinent, are rushing to retailers to sell their gold, said, retailers. Gold jewellers told Khaleej Times, the sellers are predominantly from the Subcontinent - India, Pakistan, Bangladesh, Nepal and Sri Lanka etc.
Gold sold to keep cash reserves
Gold price rose slightly to $1,707 an ounce on Wednesday evening. The yellow metal is up by 7.7 per cent in the past 30 days and 14.7 per cent the past six months. In UAE, gold is presently priced at Dh 206.35 per gram.
While some expatriates are selling it to keep reserves of cash during emergencies, many are also selling it to make ends meet. V.B. (name withheld at request), a Sharjah resident and Indian expat said as he suffered a pay cut, he was finding it challenging to pay rent, his kids' school fees, utilities, and other expenses at the same time.
"Since I got a letter from my employer, I was able to defer my car loan for three months. However, my landlord has not agreed to give a rebate on my rent and I could secure only a 25 per cent discount on my kids' fees," he explained. "It wasn't enough to keep us going, so I sold a 10-gram gold coin I had purchased when I got a bonus last year. It was an emergency, so, my wife and I decided to sell it to keep us afloat," added V.B
'No other way to make ends meet'
While some expats are selling their gold as an emergency measure, many are also selling it to simply make ends meet by selling ornaments. Several expats from India and Pakistan have said they usually buy gold as an investment or for their daughters' weddings.
Seema K, an Indian expat said, "My husband had lost his job before the pandemic hit and I was working at a salon which has since closed down. We purchased some gold a few years ago in preparation for our daughter's wedding. We have been in a very tough spot and have barely anything to keep us afloat." Seema said selling a gold necklace and a bangle was a very difficult decision to make, but are hopeful they may be able to buy it once the market improves.
Retailers make exceptions for distressed customers
Gold jewellers have also confirmed that customers are selling gold due to the impact of Covid-19 and they are giving priority to such sellers considering their financially tough situation.
"Covid-19 related circumstances would have created an economically difficult situation for many. We are also witnessing customers who are selling their gold to get cash. However, it is not to the extent we have prepared for. We give priority to customers who want to sell their gold considering the circumstances they must be facing. The least we can do is to provide the maximum value with the least amount of procedures while adhering to the local laws," said Shamlal Ahamed, Managing Director - International Operations, Malabar Gold and Diamonds.
As gold is considered a reliable investment, it is normal behaviour to sell jewellery at times of need, he added.
John Paul Alukkas, Executive Director, Joyalukkas Group, believes that people buy gold in this market for gifting, occasional wear or for investment purposes.
"The reason why people may be selling gold especially in this scenario is because they want to secure cash when the price of gold is high and also because there are many job losses and salary cuts," said Alukkas.
He added, "Also, as nobody anticipated complete lockdowns, the moment retail sector restrictions were slowly lifted in UAE, people may have never felt so much uncertainty in their lives and have secured cash in exchange of their gold. They have been saving for the rainy day."
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