CaratTwo counters, one Friday: Dubai adds 2%, Chow Tai Fook adds 40%
Dubai's published 24-carat rate of 536.75 dirhams a gram is 2.05% over the world price. Chow Tai Fook's Chinese counter at 1,348 yuan is 39.84% over. They are not the same kind of price.
§1Two counters, read this morning and yesterday.
Friday's selloff reached the retail counter over the weekend, and it reached two of them at very different heights. Chow Tai Fook's mainland China counter price for 999 fine gold read 1,348.00 yuan the gram when this desk fetched it at press time today, flat against yesterday on the page's own reading and down 39 yuan from the 1,387 this paper carried on 28 August, a fall of 2.8118%. In Dubai, Emarat Al Youm published a 24-carat retail rate of 536.75 dirhams the gram, bylined 11:56 on 29 August, alongside 497 for 22-carat, 476.75 for 21-carat and 408.50 for 18-carat.
§2Two currencies, one metal, converted at named rates.
Both are quoted in local currency against a metal that trades in dollars, so the comparison has to be made in dollars. The dirham is pegged at 3.6725 to the dollar, and the yuan read 6.73084 on xe.com at 04:12 UTC this morning. That puts Dubai's 24-carat rate at $146.1538 the gram and Chow Tai Fook's counter at $200.2722. Gold itself, at the $4,454.40 this desk re-read on Kitco this morning, is $143.2123 the gram.
§3Two points over, and forty.
Dubai's published rate is 2.0540% over the metal. Chow Tai Fook's is 39.8429% over. Per gram that is a difference of $54.12, and the Chinese counter is 1.3703 times the Gulf one for the same weight at effectively the same purity.
§4Why the spread is not what it looks like.
The spread is not evidence of anything improper, and a reader who treats it as one has misread what the two numbers are. Dubai's published gold rate is a metal rate: the souk quotes bullion and charges making separately, which is why the 22, 21 and 18-carat lines beneath it divide down almost exactly by purity. Chow Tai Fook's is a finished-jewellery counter price with craftsmanship, brand and margin already inside it, which is the ordinary shape of Chinese branded gold retail. They are not the same kind of price and they never were. What they share is the word gold and the fact that a consumer in either city reads them as the price of it.
They are not the same kind of price and they never were.
The lesson is not that Chinese gold is dear. It is that the phrase gold price does not survive a border.
A shopper weighing 536.75 in Dubai against 1,348 in Shenzhen, or either against the $4,454.40 on a screen, is comparing three different products: bullion, a metal rate quoted before making, and a finished object. This paper prints one price per metal per morning precisely because the alternative is this. Anyone quoting a counter figure as the price of gold should say which of the three they mean. The honest reading of Friday is that the world price fell 3.2604%, Chow Tai Fook's counter followed it down 2.8118%, and this paper holds no prior Dubai figure to measure the Gulf move against and will not invent one.
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