UAE: Why more expats buy gold jewellery before travelling for summer vacations

Jewellery is a value-appreciating gift, making it a popular purchase for residents travelling back to their home countries

Waheed Abbas

Published: Wed 17 Jul 2024, 11:25 PM

The decline in gold jewellery purchases by tourists in UAE during the summer holiday is balanced out by a pickup in sales from expat residents who buy precious metal jewellery for gifts, festivities and cheaper local rates as they fly back to their home countries for the season break.

Summer is a peak outbound travel season in the UAE when many people go abroad to their home countries or cooler destinations in Europe, the US and Asia. The growing population of UAE, especially of Asian expatriates, largely contributes to the growth in sales of yellow metal jewellery.

Advertising

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

“Jewellery is a value-appreciating gift, making it a popular purchase for residents travelling back to their home countries. Dubai also gives consumers access to a vast array of designs from around the globe. Additionally, with gold prices in Dubai being 10-15 per cent lower than in countries like India, it makes financial sense for expats to buy jewellery here. Furthermore, travelling back home often involves participating in festivities and cultural celebrations, where wearing jewellery is an essential part of the tradition,” said Shamlal Ahamed, managing director for international operations at Malabar Gold and Diamonds.

Shamlal Ahamed

Ahamed said the notable increase in sales usually continues until mid-July, and then sales pick up again towards the end of August ahead of the festive season.

John Paul Alukkas, managing director of Joyalukkas Group, said there’s been a noticeable trend among expatriates to purchase more gold jewellery while visiting their home countries in summer.

“This inclination is often motivated by favourable gold prices here compared to their host country, along with potential tax advantages and exemptions. Hence, expats may take advantage of this,” said Alukkas.

John Paul Alukkas

Echoing his peers, Anil Dhanak, chairman and managing director of Kanz Jewels, said expatriates purchase gold jewellery before they head back to their home countries for their annual vacations to present gold as gifts for family and friends or as a secure investment.

World Gold Council’s data for 2023 showed demand for gold jewellery in Q3 stood at 9.2 tonnes compared to 9.7 tonnes in Q1, 10.6m in Q2 and 10.3 in Q4.

Anil Dhanak

Gold jewellery buying by tourists during summer slows down due to the fewer visitors coming to the country. But sales pick up during the festival season and winter.

Shamlal Ahamed said that summer is the peak travel period for expats due to school holidays, and the major share of their jewellery sales during this period comes from resident customers.

Sales in summer – mixed reaction

Gold jewellers shared mixed reactions in terms of jewellery sales in the current summer season.

“We've observed a notable uptick in gold jewellery sales this summer compared to past seasons. This is a good sign for jewellery retailers as well as the economy because it indicates a rise in purchasing power. This surge can be attributed to several factors: heightened tourist influx, increased celebrations like weddings and festivals, and a broader economic recovery fostering consumer confidence and expenditure. It is safe to say that we are in the golden era of jewellery,” said John Alukkas.

He added that there was a healthy mix of residents and tourists who contributed to gold jewellery sales during the summer.

Anil Dhanak said despite the changes in summer season dynamics, gold jewellery sales have not picked up this year. “In fact, sales are down compared to the same period last year due to various factors, including economic conditions and fluctuating gold prices.”

He added that during this summer, the primary buyers of gold jewellery are Asians.

ALSO READ: