The demand for gold jewellery in the UAE has declined for the second consecutive quarter this year, driven by soaring global precious metal prices and a decrease in purchases by tourists. According to the World Gold Council, demand for gold jewellery dropped from 10.3 tonnes in Q4 2023 to 9.6 tonnes in Q1 2024 and further to 9.2 tonnes in Q2 2024.
During the April-June 2024 period, the demand for gold jewellery plummeted by 13 percent year-on-year, from 10.6 tonnes in the same quarter last year to 9.2 tonnes. Gold prices have recently surged, with the 24K variant exceeding Dh300 per gram. On Monday, 24K, 22K, 21K, and 18K were trading at Dh289.5, Dh268.0, Dh259.5, and Dh222.5 per gram, respectively. Spot gold was trading at $2,384.09 an ounce on Tuesday morning, having recently crossed the $2,400 mark.
Andrew Naylor, head of Middle East and public policy at the World Gold Council, identified high international gold prices as the primary factor behind the drop in UAE jewellery demand, which reflects in the local market. “Gold demand is the most sensitive to prices as jewellery is often seen as discretionary. So when the price is high, demand tends to go down. The other couple of factors that were unique to the UAE were unprecedented floods in April that did have an impact on gold jewellery. But the larger or more recent is more reliance on tourist trade as the UAE is more internationally exposed when it comes to jewellery demand,” he said in an interview.
He added, “That has had an impact as well because a lot of consumers typically buy in Dubai. From India, we had robust figures last year and that means the amount of demand here is impacted.”
This decline in gold jewellery demand in the UAE aligns with global trends, where yellow metal jewellery demand fell 19 percent year-on-year to 390.6 tonnes. Overall consumer demand in the UAE dropped 11 percent year-on-year to 11.8 tonnes during the second quarter. Additionally, high prices affected the demand for gold bars and coins in the UAE, which fell 5 percent year-on-year to 2.6 tonnes last quarter.
“The rising and record-breaking gold price has made headlines as strong demand from central banks and the over-the-counter (OTC) market supported prices, which has been a consistent trend throughout the year. The OTC market has seen continued appetite for gold from institutional and high-net-worth investors, as well as family offices, as they turn to gold for portfolio diversification. On the other hand, demand from jewellery tumbled last quarter as prices continued to hit highs, which also tempted some retail investors to take profit,” said Louise Street, senior markets analyst at the World Gold Council.
The World Gold Council’s Q2 2024 report revealed that total global gold demand increased 4 percent year-on-year to 1,258 tonnes, marking the strongest Q2 ever, bolstered by healthy OTC transactions, which rose 53 percent year-on-year to 329 tonnes.
