Fri, Nov 22, 2024 | Jumada al-Awwal 20, 1446 | DXB ktweather icon0°C

UAE: Is gold jewellery losing shine? Demand drops due to high prices

High rates internationally, coupled with a decline in precious metal purchases by tourists, resulted in a fall in sale

Published: Tue 30 Jul 2024, 10:44 AM

Updated: Tue 30 Jul 2024, 8:43 PM

Top Stories

Demand for gold jewellery in UAE dropped for the second consecutive quarter this year due to high global precious metal prices.

According to the World Gold Council, yellow metal jewellery demand dropped from 10.3 tonnes in the fourth quarter of 2023 to 9.6 tonnes in the first quarter of 2024 and 9.2 tonnes in the second quarter.

Data showed that gold jewellery demand plunged 13 per cent year-on-year to 9.2 tonnes during the April-June 2024 period, compared to 10.6 tonnes during the same quarter last year.

Stay up to date with the latest news. Follow KT on WhatsApp Channels.

Gold prices reached their highest level recently, as the 24K variant of the yellow crossed Dh300 per gram. On Monday, 24K, 22K, 21K, and 18K were trading at Dh289.5, Dh268.0, Dh259.5, and Dh222.5 per gram, respectively.

On Tuesday morning, spot gold was trading at $2,384.09 an ounce. Prices crossed $2,400 an ounce recently.

Andrew Naylor, head of Middle East and public policy at the World Gold Council, said the main factor in the drop in UAE jewellery demand is high gold prices internationally, which are reflected in the local market.

“Gold demand is the most sensitive to prices as jewellery is often seen as a discretionary. So when the price is high, demand tends to go down. The other couple of factors that were unique to the UAE were unprecedented floods in April that did have an impact on gold jewellery. But the larger or more recent is more reliance on tourist trade as the UAE is more internationally exposed when it comes to jewellery demand.

"That has had an impact as well because a lot of consumers typically buy in Dubai. From India, we had robust figures last year and that means the amount of demand here is impacted,” Naylor told Khaleej Times in an interview.

The drop in gold jewellery demand in UAE was in line with global trends as yellow metal jewellery demand fell 19 per cent year-on-year to 390.6 tonnes.

Meanwhile, overall consumer demand in UAE fell 11 per cent year-on-year to 11.8 tonnes during the second quarter.

High prices also hit gold bars and coins demand in the UAE last quarter, falling 5 per cent year-on-year to 2.6 tonnes.

“The rising and record-breaking gold price has made headlines as strong demand from central banks and the over-the-counter (OTC) market supported prices, which has been a consistent trend throughout the year. The OTC market has seen continued appetite for gold from institutional and high-net-worth investors, as well as family offices, as they turn to gold for portfolio diversification. On the other hand, demand from jewellery tumbled last quarter as prices continued to hit highs, which also tempted some retail investors to take profit,” said Louise Street, senior markets analyst at the World Gold Council.

The World Gold Council’s Q2 2024 report revealed that total global gold demand increased 4 per cent year-on-year to 1,258 tonnes, marking the strongest Q2 ever, supported by healthy OTC transactions, which increased 53 per cent year-on-year at 329 tonnes.

ALSO READ:



Next Story