Gold losing its glitter due to impact of Covid-19

GOLD has lost its shine for traders in the precious metal as they claim they have lost millions of dinars due to the impact of the coronavirus (Covid-19).

There are more than 600 gold shops across the kingdom, with nearly 300 of them located in the capital, Manama.

These shops, along with other non-essential businesses, were first shut down on April 9 and are expected to reopen on Thursday.

GCC Gold, Pearls and Jewellery Association treasurer Mohammed Malim said business has phased out and millions of dinars have been incurred in losses so far.

“Globally, Covid-19 has affected different sectors and some have felt the shock already,” he told the GDN.

“Bahrain authorities have provided relief to traders in terms of waiving utility bills for three months, providing aid to small jewellery stores through Tamkeen and other measures.

“But right now due to the closure of shops and no orders, the situation is pretty tight with losses estimated to reach BD100 million per annum.”

Mr Malim said the average turnover per month in the sector in Bahrain was about BD60m, which has been drastically affected in the past two months.

“When we opened for a few days after the first closure last month, there were some customers, but not as expected during the period especially before Ramadan.”

He said the sector employs more than 15,000 workers with the majority of them being expatriates.

Mr Malim pointed out that around 600 owners who are part of the association have voluntarily pledged not to cut the salaries of their staff.

“Our problem is further compounded by landlords who are adamant rather than being flexible in demanding rents,” he said.

“I fear many small units may shut down if this situation continues for a longer period; only big players will survive.”

He said the traders were waiting for aid from Tamkeen which could include covering 50 per cent salaries of staff working in the gold and jewellery sector.

Meanwhile, Al Seef Jewellers director Paresh Hiralal Sagar said buying gold is last on the shopping list of consumers in the current circumstances.

Stable

“Gold is a luxury and will be last on the shoppers’ list; on the contrary, we could see more customers visiting stores to sell their gold jewellery,” he said.

“Gold prices have remained stable even when oil prices dropped sharply, but no business model was prepared for such a situation as we are facing right now.”

Mr Sagar said the target of most of the companies right now is to find profit in their losses.

“I hope that by September gold traders can recover by 30pc, and 100pc by December.”

He said Bahrain jewellery was famous in the region for its craftsmanship and purity, but said with the flight restrictions even regional sales are ruled out.

“The traders’ goal now is to work out their business models to survive rather than achieve break-even, and many stores like ours are turning to online sales.

“But we need to work out the logistics to deliver the jewellery to the customer, who wants to wear it and check the size.”

According to a report last week by the World Gold Council (WGC), the pandemic slashed jewellery demand to previously unseen lows, led by a 65pc decline in China – the largest jewellery consumer and the first market to succumb to the outbreak.

The global jewellery demand fell by 39pc, while total gold supply dropped by four pc year-on-year as Covid-19 lockdowns disrupted mine production and gold recycling.

“Gold demand will continue to feel the effects of Covid-19 for the rest of 2020,” said WGC market intelligence group lead analyst Louise Street.

Source: http://www.gdnonline.com/Details/822006/Gold-losing-its-glitter-due-to-impact-of-Covid-19