Dubai's Gold Jewelry Demand Falls Sharply
The Decline in Demand for Gold Jewelry in Dubai: Impact of High Prices and Global Uncertainties
Gold has always been a symbol of safety and stability, but recently significant changes have occurred in the trade and investment market for precious metals. In the United Arab Emirates (UAE), the demand for gold jewelry has significantly decreased due to high prices and India's import duty reductions. Meanwhile, investors are increasingly turning to bullion and gold coins to capitalize on rising prices amidst global uncertainties.
Decline in Demand for Gold Jewelry
According to the latest data from the World Gold Council, the demand for gold jewelry in Dubai decreased by 14% in the fourth quarter of 2024. This decline is primarily attributed to high gold prices and India's decision to reduce its gold import duty from 15% to 6%. Data shows that the demand for jewelry fell to 8.8 tonnes in the same period, compared to 10.3 tonnes in the previous year.
High prices have undoubtedly influenced consumer behavior. The price of gold rose to record highs, especially noticeable in Dubai, where the price of 24-karat gold was 344 dirhams (Dh) per gram, and 22-karat gold reached 320.25 dirhams per gram at market opening. These prices are also considered record highs.
Increasing Demand for Bullion and Coins
Although demand for jewelry has declined, the demand for bullion and gold coins has increased. Investors are increasingly turning to gold to protect their portfolios from global economic uncertainties. According to the World Gold Council data, the demand for bullion and coins rose from 3.1 tonnes to 3.4 tonnes over the examined period.
Gold prices reached record highs last week, hitting $2,854 per ounce. This increase is partly due to strong demand from central banks, interest rate cuts, and concerns related to U.S. President Donald Trump's policies. Gold prices reached record levels for the fourth consecutive business day, and analysts say the $3,000 per ounce goal is easily attainable in the near future.
Decline in Consumer Demand
The overall consumer demand for gold in the UAE decreased by 8% in the fourth quarter of 2024, from 13.3 tonnes to 12.2 tonnes. Per capita consumer demand also fell: in 2024, it was 4.36 grams, compared to 4.8 grams in 2023 and 5.38 grams in 2022 on average. This decrease is clearly due to high prices, which cause consumers to buy fewer jewelry pieces.
According to the CEO of Liali Jewellery, the decline in gold jewelry sales was expected due to record high prices. "Global consumption of gold jewelry decreased by 11% in 2024, with declines of 6% and 27% in markets like India and China, respectively. However, we focus more on diamonds, so this trend has not significantly affected our business," he said.
Impact of Global Uncertainties
The senior analyst at Swissquote Bank believes investors might seem calmer than earlier in the week, but the demand for safe investments remains high due to global uncertainties. "There is no better hedge against Trump-related concerns than gold: as international relations become more chaotic, demand increases—especially from central banks looking to reduce their exposure to the U.S. if Trump focuses on them. As a result, gold prices have skyrocketed, reaching $2,860 per ounce in Asia. At this rate, the $3,000 target seems easily attainable," he said.
Summary
The decline in gold jewelry demand in Dubai and other markets is clearly the result of high prices and global economic uncertainties. However, the increasing demand for bullion and coins shows that investors continue to seek safety in gold. Gold prices may remain high, especially if the global political and economic environment remains uncertain. The $3,000 per ounce target increasingly seems like a realistic goal in the near future.
Changes in the gold market carry an important message for both investors and consumers: in addition to buying gemstones and jewelry, it is worth considering the possibilities of bullion and coins, which continue to offer a safe investment option in uncertain times.
