UAE residents avoid gold rush with smart shopping after prices hit three-month high

Resident consumers in the UAE are steering clear of a gold surge as prices for the precious metal hit a three-month high. Market analysts advise shoppers to monitor price changes closely and invest in smaller pieces of jewelry and coins rather than postponing purchases. Gold prices jumped upon the market's opening on Monday, with 24-karat gold selling at Dh559.50 per gram.

Nonetheless, prices stabilized on Wednesday after four consecutive days of rising. Market expert Anil Dhanak, head of Kanz Jewels, noted a shift from impulsive buying to more cost-aware purchasing. He emphasized that overall demand for gold stayed robust despite customers' heightened budget mindfulness. Retailers attributed the trend to global economic uncertainty, predictions of interest rate reductions, a weaker US dollar, and continuous investor interest in gold as a secure haven asset.

Central bank purchases are also contributing to the bullish outlook. Dubai Jewellery Group chairman Tawhid Abdulla explained that consumer interest remains robust even as prices climb, with buyers adjusting their purchase quantities, product types, or budgets to fit their needs. Rather than withdrawing from the market, buyers are observing prices and making acquisitions when they dip.

Bafleh Jewellers' managing director, Chirag Vora, stated that shoppers are becoming more "smart" in their purchases. This includes a rise in lightweight daily-wear jewelry weighing 10g to 12g, as well as 24-karat coins and bars for saving and gifting. John Paul Alukkas, CEO of Joyalukkas, highlighted the trend of more strategic buyers who wait for minor price corrections to enter the market instead of rushing into volatile spikes.

Malabar Gold and Diamonds, a company with stores in 14 countries, is also experiencing similar patterns, with customers spending more time assessing designs and budgets while maintaining steady conversion rates. The company provides a scheme allowing customers to pay a portion of the price upfront to secure the current rate for three or six months, with the option to buy at a lower price if the market dips during that period.

Investment-focused buyers are driving demand for smaller coins and bars due to lower making charges and the flexibility to purchase in smaller denominations. Meanwhile, jewellery purchases continue to be linked to weddings and festivals, with some families opting for phased purchases instead of buying everything at once. Abdulla added that the UAE's demand base includes residents buying gold while traveling and a cultural inclination toward gifting tied to weddings and celebrations.

The upcoming Indian festival season is anticipated to considerably increase demand. While higher prices have diminished the volume of gold purchased per transaction, retailers assert that overall interest has not waned. "Customers tend to modify the weight and design rather than entirely delay their purchases, especially during wedding and festival periods," Dhanak noted.