UAE shoppers turn to gold bars, coins as price returns to $2,000/oz level

UAE shoppers turn to gold bars, coins as price returns to $2,000/oz level

Price was the principal factor that saw UAE jewellery demand drop around 15 per cent during the third quarter, a period when gold kept to $1,900 an ounce levels for the better part, according to the latest World Gold Council data.

In the last 12 months, gold prices are higher by around $350 on an ounce basis. This makes for a compelling investment case, which explains why many UAE shoppers thought of changing their preferences.

Gold bar (which do not carry the 5 per cent VAT) and coin demand held up nicely. “This demand was predominantly led by UAE resident shoppers,” said Andrew Naylor, WGC’s Head of Middle East and Public Policy operations. “And clearly, the high local gold prices were the reason why jewellery demand slipped during the period.”

Clearly, this marks quite a shift from how UAE consumers are getting into gold. The June-July phase is one of the high seasons for gold buying, especially for those expat residents returning to their home countries for the summer holidays. This year, they used quite a bit of that spending on gold as an investment in the form of bars and coins rather than straight jewellery. Thereby saving on making costs.

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