Gold retailers in the UAE are resorting to a range of measures including reduced making charges, attractive payment plans and exchange schemes, and lightweight jewellery collections to stimulate the market and boost consumer demand as prices hit a record high.
The precious metal has surged 20 per cent this year on safe haven demand amid rising concerns of a global trade and tariff war, macroeconomic uncertainties and geopolitical problems. Bullion had a ferocious run last year that was largely driven by massive central bank purchases and robust demand in Asia.
“It's uncharted territory for everyone in the industry. We are facing many challenges in terms of customer demand,” says Varun Patni, director of Abu Dhabi-based Ajanta Jewellers.
“While one half is waiting for prices to dip before making a purchase, the other half believes gold prices will only get higher from here on, so they are in the mindset to buy now.”
Gold reached an all-time high of $3,167 per ounce on April 2 in response to US President Donald Trump's reciprocal tariffs announcement. The precious metal has been one of the strongest performing commodities this year and in the January-March period, recorded its best quarter since 1986.
director of Abu Dhabi-based Ajanta Jewellers
Vijay Valecha, chief investment officer at Dubai-based Century Financial, believes the current gold rally, “resembling a strong performance seen in 1986”, has been driven by consistent central bank buying, expectations of lower interest rates and geopolitical tension.
Additionally, global holdings in bullion-backed ETFs have surged to their highest levels since September 2023.
UBS’s base case forecast for gold for the year is $3,200 per ounce, “but our upside case could see gold even going to $3,500 if we get a sharp economic slowdown”, according to UBS analyst Giovanni Staunovo.
Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, picks gold as the “safest play in town” when it comes to US tariff uncertainty.
To buy or not to buy
High gold prices are weighing on consumer sentiment.
Lendl Dsouza, a UAE resident who works in the banking sector, used to buy a chain or a gold biscuit every three to six months. He has now completely stopped buying gold.
“When I came to the UAE 10 years ago, the rate was around Dh120 for 1g of 22 carat gold, now the rate has shot up three times and it's becoming difficult to even buy a small piece of jewellery to gift or for personal use,” he says.
“We are not able to afford to even invest in gold. Hopefully, the price will come down soon and we are able to afford buying gold again.”
High prices coupled with Ramadan, which is historically a slow month for sales, resulted in a drop in demand for gold shopping in the UAE, according to Mr Patni.
“We tried to combat low demand with incentives and offers,” he says. “A lot of our jewellery is being sold without making charges or reduced making charges. Plus, we've started to keep more lightweight gold jewellery collections, which are more affordable. The overall trend for customers is to buy jewellery that can be worn every day. We have changed our product line to cater to price-conscious consumers.
“A lot of customers are exchanging and even selling old gold because bullion is at a good price, so it’s the right time to cash in.”
Ashish Vijay, founder and owner of Tiara Gems and Jewellery, agrees that jewellery retailers are offering many schemes to stimulate the market, such as part payment options to cater to salaried professionals, exchanging old items, reducing making charges and focusing more on design than weight, he adds.
While a small percentage of customers are selling gold and redirecting their investment to real estate, more people are positive about retaining gold, he says.
Tarun Rustagi, a UAE-based finance professional, says those who hesitated to buy gold earlier now wish they had bought sooner, but seasoned investors understand that it is a reliable store of wealth over time.
Many believe that gold remains a safe investment, reinforcing its status as a preferred hedge against inflation and economic uncertainty, he adds.
Mr Vijay claims many people are also divesting their stocks and other investments to buy gold-backed ETFs and digital gold because of the bullish trend. With many shoppers turning into investors, he expects gold to touch $3,500 this year.
“People like to invest in gold bars and coins, which can be sold faster. They prefer to go for 24 carat or 22 carat because it is more pure and easy to sell,” he says.
“One should consistently invest a part of their income, say 5 per cent or 10 per cent, in gold. It will average out well.”
Changing patterns
Amreen Iqbal, founder of wearable jewellery brand Piece of You, says she has observed a shift towards lightweight jewellery. Some customers opted to buy smaller-ticket items during Eid, rather than scaling back entirely.
For the Indian festival of Akshaya Tritiya this month, the company plans to offer reduced making charges, gold exchange programmes and special pricing on select collections.
“To those waiting for gold prices to drop, we always emphasise that gold is a long-term investment. Historically, prices tend to stabilise over time. Instead of delaying, customers can take advantage of our flexible payment plans and promotional discounts,” Ms Iqbal says.
Mr Patni says that although they keep 18 carat jewellery in the store, their “bread and butter” is 22 carat, while 24 carat is generally bought in the form of bars or coins.
“More and more people are seeing the value of gold owing to the rising price. They're more inclined to now see gold as a good long-term investment and put their savings into it,” Mr Patni says. “We have a booking system where we fix the gold price so the customer can book any jewellery and they have up to three months to pay it off.”
Typically, the tourist market for gold is stronger in Dubai, while jewellers in Abu Dhabi usually cater to local resident customers, he says. With the reduction in customs duty for gold imports in India, the price difference between India and the UAE is less than what it used to be.
“In gold, or any other asset class, you will never get the lowest price when you want to buy and the highest price when you want to sell,” he says. “It is best considered a long-term investment for generations or decades. You should be buying regularly, regardless of what the price is. It's never a good idea to trade it like shares.”
