Despite high prices, demand for gold continues [Archives:2008/1150/Reportage]

April 28 2008

Alia Ishaq
Gold prices continue rising due to the gradual fall of the U.S. dollar. Currently, an ounce of gold costs $890, although this amount recently reached its highest at $1,000

Despite this, demand for gold on the Yemeni market hasn't dropped, with even more people continuing to purchase the valuable metal. Many Yemenis believe the gold price will continue rising, so they keep buying it.

“Those who can afford to buy gold become obsessed with buying more and more,” commented Abbas Al-Arifi, who runs a Sana'a gold shop.

He noted that only a handful of people have stopped buying gold because they can't afford its new price, adding that it's impossible for gold prices to decrease anytime soon.

Fellow Sana'a jeweler Hussein Al-Hashidi seconded Al-Arifi's views, saying some people buy more jewelry as soon as they hear that its price has jumped.

“I think they panic that the price will go even higher, so that causes them to buy more,” he explained, adding that many people feel that the new price is very expensive and difficult to afford.

“Generally, the price hike hasn't affected gold sales because many people still feel that they need to buy jewelry, no matter how expensive it is,” he remarked.

Another worker at a jewelry store, Ali Hussein, laughs ironically as he explains, “When people learn that the price of gold has risen, they rush to buy, but when the prices go down, they don't buy.”

The need to buy jewelry is what keeps Sana'a housewife Um Abdullah Bin Jamil buying gold today. As she browsed jewelry in a store, she said, “While it's not easy to buy gold anymore, the price may go higher, so this is what makes me come here.”

Yemen imports various types of gold from countries like Bahrain, Kuwait, the United Arab Emirates, India and Saudi Arabia.

According to sellers, some types are more expensive because of their quality and trademarks. For example, a gram of Bahraini gold costs YR 5,600, while Saudi gold costs YR 5,300, both of which are more expensive than Yemeni gold, which is YR 4,700 per gram.

Reasons for gold price hike

Analysts say the most important reason for the hike in gold prices is the fact that investors worldwide are redistributing their resources to hard assets such as gold and silver, which are known to retain their value.

According to Sana'a University economics professor Taha Al-Fusayyil, the gold price hike directly relates to the breakdown of real estate mortgages in the United States, which has gold speculation on the stock market, eventually causing more demand for gold and increasing its price dramatically.

But is the price coming down anytime soon? Al-Fusayyil points out that gold prices have increased several times before and eventually gone down again, “However, in this case, it'll go down if the real estate crisis gradually improves and if new areas of investment are discovered.”

He adds, “It's all related to the U.S. economy, which in my opinion, will regain its strength, probably after two or three years, if everything works out well.”

Gold's importance to Yemeni women

It's well known that buying gold is extremely important for Yemeni women. For many, jewelry is very precious and near to their hearts because the gold a women wears has always been a sign of her class and wealth. According to gold traders, this causes many women to spend their money on jewelry in order to present a certain impression.

For many Yemeni women, having more jewelry also ensures security, knowing that they have something precious to sell if the need arises. “Undoubtedly, many women feel more powerful if they have more jewelry. Many sell their jewelry whenever they need money, as do many people, especially these days as the prices increase,” Al-Arifi explained.

He also noted that some women are so obsessed with buying jewelry, that they buy new pieces at least monthly. As for those who can't afford new jewelry, they'll sell their previous pieces and then buy new ones in order to look good in front of their friends.

Summertime and after the eid holiday usually are very busy times for gold sellers, as those are the wedding seasons in Yemen and the time of year when most Yemenis prefer marrying because many can be on vacation from school or work and therefore, have more time for wedding preparations, which include purchasing dowries for brides and other women buying jewelry in order to look stylish at these weddings.