Prime Highlights:
- Prices of Dubai’s 22K gold are approaching Dh400 per gram due to the volatility in the world gold market and rising investor demand.
- Sales of traditional gold jewellery, however, have fallen despite the price hike, local jewellers say, as people are opting for other varieties such as diamonds and lighter gold jewellery.
Key Facts:
- Dubai gold prices have recorded a steep rise, with 22K gold holding at Dh400 per gram, nudged by international factors such as concerns of inflation and geopolitical uncertainties.
- Traditional 22K gold jewellery demand in the UAE has decreased 13% in 2024, more than the decline of 11% on a global scale.
- Customers are turning to lab-grown diamonds and white gold jewelry in greater quantities, with Indian UAE lab-grown diamond exports rising by 57% over two years.
Key Background
Dubai, the “City of Gold,” has traditionally been a centre for trading in gold and jewellery, and shoppers have poured there from near and far. But following the recent gold price bubble, when 22K gold was nearly Dh400 a gram, consumer demand is being rewritten. Gold may still be an attractive investment product, but with prices at record levels, consumers are discouraged from going ahead and purchasing the conventional gold jewellery.
Dubai Gold Souk traders note a sharp decline in footfalls and sales of 22K gold jewelry. Customers are choosing alternatives like diamonds and light gold accessories that are cost-effective and trendy with the new fashion groups. Lab diamonds, in particular, have witnessed massive demand, India’s exports to the UAE, for example, have increased by 57% in the past two years.
The rise in prices of gold has been attributed to a mix of factors such as global economic unrest, inflation fear, and global geopolitical tensions. These have seen investors flock into safe-haven assets such as gold, whose price has thereby risen. Gold price fluctuations, however, are affecting consumers’ confidence, particularly in countries like India that account for much gold demand in the Gulf.
Despite the hiccups, there are some traders who look at the future of gold jewellery in Dubai with optimism. According to them, the new prices will eventually find acceptance among the customers, and the cultural significance of gold as an ornament during festival periods as well as an investment tool would always ensure a strong demand. To add to that, there are the forthcoming festival seasons, i.e. Diwali and Dhanteras, can be a temporary sales boost, as gold is culturally important during these festivals.
In general, while the record gold prices constitute a challenge to traditional jewellery trading in Dubai, the sector is countering it by diversification and innovation. The shift towards alternatives like lab-grown diamonds and light gold products is an indication of changing customer tastes under economic pressures. Traders believe that long-term cultural demand for gold will continue to make it desirable.
