UAE: Shoppers buy more lightweight gold jewellery amidst record-high prices

Rising prices of gold have impacted sales as investment buyers – especially Asians – are holding back at the moment

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Published: Thu 26 Sep 2024, 6:00 AM

Last updated: Thu 26 Sep 2024, 7:44 PM

Manufacturers in the UAE are producing more lightweight gold jewellery as demand for lightweight yellow metal ornaments has increased due to prices hitting all-time highs in Dubai.

Industry executives say that precious metal jewellery below 15 grams is in demand as shoppers are not stretching their budgets to buy gold jewellery.

They noted that record-high prices of gold have impacted sales as investment buyers — especially Asians — are holding back at the moment.

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Gold prices have been rallying for the past few months, hitting an all-time high of Dh322.75 per gram in Dubai on Wednesday evening. Among the other variants, 22K, 21K and 18K were trading at Dh298.75, Dh289.25 and Dh248 per gram, respectively. (Click here for the latest gold rates.)

Spot gold was trading at $2,664.68 per ounce, up 0.25 per cent. Prices have been rallying on expectations of further interest rate cuts, geopolitical tension in the Middle East and revival of funds inflows into exchange-traded funds.

Up to 15 per cent drop in sales

“The gold prices have surprised everybody, severely affecting the market. People say they saw one item a month ago and now it is 30 per cent more expensive. We can’t control that. The price increase impacted everybody in the business and more so in the wholesale. There is quite a substantial impact, averaging 10-15 per cent. Because of diversification, we have had the least impact from the price hike,” said Tawfique Abdullah, chairman of Jawhara Jewellery.

He said there is a big change in the jewellery industry in terms of weightage compared to a decade ago.

"Jewellery manufactured 10 years ago and what we have in the market now, everything has gone down in weight because of the price. If jewellers produce a 20-gram ring, they will find no buyers. So every manufacturer is turning its production to lighter weight jewellery. The ornament might look the same in design, but it will be lighter in weight,” Abdullah told Khaleej Times in an interview recently.

Tawfique Abdullah

Not stretching budgets

John Paul Alukkas, managing director, Joyalukkas Group, said there has been a notable surge in demand for lightweight gold jewellery in the UAE recently.

“Our understanding is that as gold prices climb, customers are seeking more affordable options… This is now quite popular with jewellery lovers. These pieces appeal especially to modern, style-conscious buyers who want to enjoy gold without stretching their budgets,” he said.

John Paul

Due to high demand, Alukkas stated that manufacturers are increasingly focusing on lightweight jewellery.

“In response to changing consumer preferences and the economic climate, they’ve adapted by creating new and intricate designs that use less gold while maintaining their premium quality. The goal is to balance affordability with exquisite designs, ensuring that even in a high-price gold market, customers can still access beautifully crafted pieces,” he said.

5-15 gram pieces in demand

John Paul Alukkas said they’re seeing particularly high demand for pieces in the 5 to 15-gram range.

“This weight range offers an optimal balance between style, affordability, and sophistication, which makes it a popular choice among our customers. Buyers appreciate that they can still enjoy the elegance of gold without the financial commitment that heavier pieces require. This trend spans across various jewellery categories, including necklaces, bangles, and rings, where lighter designs continue to attract those looking for everyday sophistication,” said the managing director of Joyalukkas Group.

Shamlal Ahamed, managing director for international operations, Malabar Gold and Diamonds, said although record-high gold prices have affected demand for lightweight jewellery, these price hikes underscore gold’s status as a value-appreciating asset, meaning customers stand to gain from purchasing more gold.

Shamlal Ahamed

“To assist customers during the festive season, we have introduced our 'pay 10 per cent advance' offer, allowing them to secure current gold prices by paying just 10 per cent upfront. More than 300,000 buyers have benefited from this programme, which ensures they can buy jewellery at the locked rate if prices rise, or take advantage of lower rates should prices drop,” he said.

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