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UAE: Gold jewellery sales rise despite record-high prices, here's why

Retailers say high gold and jewellery prices have not much impact on tourists, but residents opt for wait-and-watch approach

Published: Thu 4 Apr 2024, 9:57 AM

Updated: Thu 4 Apr 2024, 9:18 PM

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Gold jewellery sales in the UAE increased despite yellow metal prices hitting a record high on Thursday.

Retailers in Dubai said consumers continue to purchase gold and precious metal jewellery on the back of expectations of prices rising further in the months ahead.

Gold prices rose to a record $2,300 an ounce on early Thursday morning. It gained 9 per cent in March alone.

In the UAE, the 24K variant of the metal rose to Dh278.25 per gram, while 22K, 21K and 18K were trading at Dh257.5, Dh249.25 and Dh213.75 per gram, respectively, on Thursday morning.

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“Sales have actually increased since prices hit an all-time high. Customers seem to be a bit apprehensive, thinking prices might keep going up, so they're making their purchases now. The high prices seem to be acting as a motivator for customers to buy now rather than wait,” said John Paul Alukkas, managing director, Joyalukkas Group.

Additionally, he said, the perception of gold as a stable investment during economic uncertainties is further driving sales.

Shamlal Ahamed, managing director for international operations at Malabar Gold and Diamonds, said even though prices have been on an upward slope for the past few weeks, customer footfall and subsequent sales across their showrooms in the UAE have remained high.

“This can be attributed to the jewellery purchase in relation to Eid and other festivities, aided by the pay 10 per cent advance offer that we introduced last month. The advance facility enabled customers to block the gold rate by paying just 10 per cent of their sale value as advance. Jewellery buyers who have availed of this facility can indulge in their jewellery purchase without having to worry about gold rate fluctuations as they are assured the best rate, regardless of which direction it moves,” said Ahamed.

Doesn’t affect tourists

Gold and jewellery retailers revealed that high prices of the precious metal do not much have impact on the tourists, which account for a good chunk of gold and jewellery sales in Dubai.

Known as the 'City of Gold' for being a regional hub for precious metal and its jewellery, Dubai attracts millions of tourists every year who visit the world-famous Dubai Gold Souk to purchase their favourite gold and jewellery.

“The two main reasons why tourist customers engage in gold jewellery shopping in Dubai are the plethora of designs and the relatively low gold rates when compared to their home country. With these unique advantages, it is safe to assume that gold rate hikes do not affect the buying behaviour of tourist customers,” said Ahamed.

However, Malabar Gold and Diamonds managing director said this may vary for resident consumers as they have the luxury to opt for a wait-and-watch approach during gold price hikes.

Echoing his industry peer’s comments, John Alukkas said locals and tourists definitely have different approaches, especially when prices are high. “Tourists, for example, are less affected by the high prices here because gold rates in the UAE are often lower than in their home countries. Plus, they have the added benefit of being able to explore international jewellery collections here. And let's not forget the 0 per cent VAT for tourists makes shopping for gold and jewellery even more enticing despite the price fluctuations,” added Alukkas.

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