Demand for gold in Jordan loses sparkle amid rising prices

AMMAN — The end of the year has been marked by a notable decrease in the local demand for gold due to rising prices and other economic factors, according to stakeholders. 

Husam Addin, a jeweller in Amman’s gold souk, said that the market has been “tough” since the outbreak of the COVID-19 pandemic, with only short, temporary periods of demand throughout the year.  

“Before the pandemic, I used to sell at least JD20 to JD50 worth of jewellery per day. Now I sometimes go for five days without making one sale,” he told The Jordan Times. 

Husam Addin views the tough economic situation as the main reason behind the low purchasing power. 

“People are struggling to make ends meet, which leaves no room for such non-essential items,” he said. 

Mohammad Abu Sarah, an employee at a local jewellery shop, said that although it’s normal for year-end gold demand to be low, this December’s sales are weaker than usual. 

Gold demand reaches its peak during the summer, which marks the return of expatriates, who “have a higher purchasing power than local customers”, he told The Jordan Times. 

Bayan Bayya, an accountant at a jewellery shop in Amman, said that winter is a very stagnant period for the gold market in Jordan. 

“The economic situation, marked by unemployment and an increase in prices, is also a contributing factor in the decreased demand,” she told The Jordan Times. 

Akram Al Shihab, a member of the General Syndicate of Owners of Trade and Jewellery Shops, noted that after life returned into pre-pandemic normalcy, the demand for gold in Jordan increased by 50 per cent in the summer of 2022. 

“This was due to the fact that a large number of Jordanian expatriates who couldn’t travel during the pandemic’s lockdowns and restrictions returned to Jordan in the summer,” he told The Jordan Times. 

Shihab added that this summer also witnessed a large number of weddings that had been postponed due to the pandemic. 

This stimulated the local market, as Jordanian weddings are often accompanied by the tradition of buying a significant amount of gold for the bride, he continued. 

However, the surge in the sector’s economic activity was short-termed, he said.

In October, the demand for gold dropped by 10 per cent, followed by a 15 per cent drop in November and a 20 per cent drop in December, according to Shihab. 

As of Tuesday evening, one gramme of 21 karat gold was being sold for JD36.80 and purchased for JD35.30, while one gramme of 18 karat gold was sold for JD33.10 and purchased for JD30.10, according to the syndicate. 

Economist Hosam Ayesh noted that there are several factors that influence the prices of gold. 

Gold prices go down when interest rates increase. Also, when the US dollar weakens against other currencies, the value of other countries’ currencies increases, which increases the demand for commodities like gold, leading to an increase in price, he told The Jordan Times. 

In 2022, central banks around the world stocked up on gold in “record quantities due to the prevailing economic uncertainty and rising inflation”, which lead to an increase in the prices of gold due to the high demand, according to Ayesh. 

The Russia-Ukraine crisis has also reduced the gold supply, leading to an increase in prices, he said. 

Economists predict that gold prices will surge above $2,300 per ounce in 2023 as recession fears grow, Ayesh added. 

According to Ayesh, Jordan’s jewellery imports increased by 112.5 per cent during the first nine months of 2022, compared with the same period in 2021, reaching JD1.387 billion.