UAE jewellery demand drops 20% in Q2-2023 as high gold prices get in the way

Dubai: The price of gold continues to be an issue for shoppers in the UAE as jewellery demand took a steep 20 per cent dent between April to end June from a year ago. In all, 10.6 tonnes of jewellery featuring the favoured metal was sold in the second quarter against 13.2 tonnes in Q2-2022 as gold prices stuck to well over $1,950 an ounce levels, according to World Gold Council data released today (August 1).

But the 10.6 tonnes does represent an improvement on the 9.7 tonnes sold in the first three months of 2023, when prices were closer to $2,000. Currently, gold is at $1,965 levels, while the UAE gold rate is at Dh221.25 for a gram of 22K.

“Not just in the UAE, consumer demand for jewellery across most gold consuming markets – with the exception of China – was down in the second quarter,” said Andrew Naylor, Head of ASEAN Markets and Public Policy at World Gold Council, which recently reopened its office in Dubai.

“Price sensitivity affected consumption, no doubt.” (Naylor adds that the higher Q2-22 demand also stemmed from a rush of buying by residents and tourists after the Covid hangover subsided. ) Meanwhile, in the latest quarter, Saudi demand during the period was steady at best (9.5 tonnes), while shoppers in India kept a good distance from jewellery shops as local prices soared (129 tonnes from an 8 per cent decline). But in Turkey, there was a pick up in demand but more as investments.

An all-too-brief price drop

In mid-June, UAE gold buyers and retailers had seen a glimmer of hope that prices were subsiding, and it did drop to under $1,910 an ounce. But it was all too brief a moment for demand to kick in.


All through July gold was back to pushing higher, and jewellery retailers say there was subdued pre-summer holiday buying among resident shoppers.

“Tourist shoppers have become a crucial focus, as the consistent appeal of ‘cheaper’ gold jewellery prices – compared to India, for instance – ensures an enduring price advantage,” said Anil Dhanak, Managing Director of Dubai-based Kanz Jewels.

More of the same

In the coming weeks, gold looks likely to stick to elevated price levels, and pushing past $2,000 once again. Even the latest interest rate hikes by the US Fed had no material impact on gold.

“Gold’s keeps adding to its safe haven status,” said Naylor. “While interest rate hikes are typically headwinds for gold, the latest Fed hikes have been priced in by the gold markets. That’s because the expectation is the series of interest rate increases will stop and gold will draw significant investor interest.

So, most likely, gold will remain at elevated levels, consumer demand could be weak and so will demand for jewellery fabrication.

– Andrew Naylor

When is a good time to get into gold?

That would depend on when more shoppers get comfortable with gold at $1,950 plus levels. Each time prices drop below those levels, it becomes difficult to convince buyers as to the right time for a re-entry.

The trend in gold prices has been challenging for shopper demand. This has prompted potential buyers to hold back, hoping for further drops or seek alternative investment options.

– Chirag Vora, Director at Bafleh Jewellers

The typical UAE gold shopper knows the value of patience and will be waiting for the right time to make his/her presence felt when the prices turn favourable. What that favourable price level would be is the big question. Will gold go back to $1,800 or under of the pre-Covid times?

Gold shines in China, Indian demand dips

  • China was a major exception to the subdued demand fro jewellery, gaining 28 per cent to 132 tonnes in Q2. “The end of the zero-COVID policy laid the foundation for a rebound in China’s gold jewellery demand,” says the World Gold Council report. “Pent-up wedding demand from last year also provided support.”
  • Chinese shoppers were also showed a marked interest in the 24K version. “Their lighter weights offset the impact of higher gold prices and better suiting the budgets of younger consumers,” WGC notes.
  • Indian jewellery buying in H1-23 totalled 207 tonnes, down 12 per cent. “Although the domestic economy remains relatively healthy, there are indications of a slowdown in discretionary spending,” says WGC. “The success – or otherwise – of the monsoon season will also have a considerable bearing on demand for the remainder of the year.”