Investment or Luxury? Buying Gold in UAE

Buying Gold Jewelry in the UAE: Investment or Luxury?

In the United Arab Emirates, purchasing gold jewelry is not just a fashion statement or cultural habit, but increasingly an investment decision. Due to a significant rise in gold prices over the past year, many buyers have realized returns of up to 30%, especially those who purchased with a focus on gold content. But is every piece of gold jewelry such a profitable investment? The answer is not straightforward, as the true return is influenced by several factors.

The Spectacular Rise in Gold Prices

At the end of September 2024, the price of gold in the UAE reached an all-time high: the price per gram of 24-carat gold reached 456 dirhams, while 22-carat gold traded at 422 dirhams. This is a significant jump from prices a year earlier, when the same carat gold cost 322 and 298 dirhams. This means that the price of gold increased by 134 dirhams per gram for 24K and 124 dirhams for 22K – roughly a 40% increase for the precious metal.

What is the Return an Average Buyer Could Achieve?

Buyers who, for example, purchased 5,000 dirhams worth of 22-carat gold jewelry last year could have gold worth up to 6,500 dirhams today if we consider only the precious metal price. This represents a 20–30% return, which is much higher than what many traditional savings forms offer. However, the equation is not always that simple.

Hidden Costs: Making Charges and Aesthetic Prices

The price of gold jewelry is not just the market value of the gold. The final product price includes the design, craftsmanship, and other costs. These so-called 'making charges' often account for 5–25% of the price. This means that of a piece of jewelry purchased for 5,000 dirhams, only about 4,000 dirhams might be the value of the gold itself.

Moreover, when someone returns jewelry to a dealer, they don't always receive the full value calculated based on the current gold price. Wear and tear, reduced purity, or a complex design can result in further losses when the jewelry is melted down. Thus, the actual profit may be around 700–1,200 dirhams in the mentioned example, even if gold prices were favorable.

Gold for Investment – Jewelry vs. Bars

Those who wish to invest in gold often choose coins or bars instead of jewelry. These do not include design costs, are easy to sell, and their purity and weight can be precisely tracked. Precious metal traders apply much smaller margins between buy and sell prices on these products, making returns more predictable.

What Factors Influence the Investment Value of Gold Jewelry?

1. Carat Count - The higher the purity (e.g., 24K vs. 22K), the greater the raw gold fraction in the jewelry, and the more favorable the resale price can be.

2. Timing of Purchase - If someone buys near a low point and sells at a peak, they can obviously realize better returns. However, the gold market is also sensitive to global events.

3. Making Charges and Design - The less the 'making charge,' the higher the metal's proportion of the total price, meaning better investment potential.

4. Resale Location - In the UAE, the gold market is particularly developed, and traders often offer fair buy-back prices. The same piece of jewelry may sell for much lower elsewhere.

5. Condition and Wear - Frequently worn, scratched, or deformed jewelry may depreciate faster, even if the gold content remains.

The Role of Gold in Culture and Economy

Buying gold jewelry in the UAE is not just a fashion choice but a cultural tradition. During the wedding season, especially after Ramadan, there is a huge demand for various styles of jewelry, whether classic Indian, Arabic, or Western designs. Many families purchase gold not just as gifts but as a form of savings that can be passed down through generations.

Is It Worth Buying Now?

Gold prices remain volatile, and although they generally show long-term growth, short-term fluctuations can occur. Currently, in the fall of 2025, gold has corrected somewhat from its spring peak but remains at a high level. Those planning to buy should make informed decisions: choose investment-oriented bars, or if purchasing jewelry, look for simpler pieces with low making charges.

Summary

Buying gold jewelry in the UAE can be both a fashion statement, tradition, and an investment – but success relies on making smart decisions. Based on the past year's experiences, it can be said that those who purchased wisely and with less complex designs at the right time may now enjoy significant gains. However, remember that jewelry holds not only investment value but also emotional and aesthetic worth, which sometimes weighs more than the rate of return. Gold is eternal – but not all forms are equally profitable.

(The article is based on reports from gold jewelry traders.)