In the UAE Gold prices have hit an all-time high with 24K gold trading at or around $2500 an ounce or Dh277-Dh281 per gram for 22K gold. It has spurred a new round of the buying and selling of gold in the UAE as both the residents and tourists do not lose an opportunity to ‘recycle’ old ornaments and use the money to buy new ones.
Trading Up: The Establishment of a New Trend
A cross-section of the consumers in the UAE is again interested in buying ornaments and many who had bought gold at cheaper rates, like at Dh200 per a gram or even lesser, want to enhance their stocks. For instance, during Diwali in the last week of October 2022, gold was selling at Dh 205 per gram while in early November it was at Dh 201 per gram when the world bullion price was at $1,619 per ounce.
The situation is the same now as gold has now ascended above $2,500 mark and this has put a lot of momentum into the whole market. Purchasers say traditional consumers who might have been reluctant to spend Dh10,000 or more to acquire a necklace are now ready to do so. It is all about consumption and conspicuous consumption of the latest available models.
Tourism: New and Improved, Customers Get in on the Gold Rush
This is not the case only for UAE residents. Exchange schemes for jewellery have become popular among tourists from India, Pakistan and especially Saudi Arabia, other GCC countries and even North Africa. The mental effect that gold going to $2,500 has created is that it has introduced the reality of people constantly redoing their layouts, and styles of their jewels.
Jewellery Retailers Cash In
UAE jewellery retailers have not been left behind by this direction among consumers. Joy Alukkas, the Chairman of the Joyalukkas, a chain of jewellery outlets, also reported an upswing in the number of people who are prefer to exchange their worn out ornaments. “This trend shows that there is a growing focus on the preservation of value from the side of customers: which is why we make every effort to help customers easily update their collections – including by providing fairly high exchange rates, and making minimal deductions,”
Traditionally viewed as just another commodity, gold has been setting its prices higher and higher – to $2,200, $2,300, $2,400 and now $2,500 an ounce in the first half of 2024. This has made many who had been reluctant, or shy, to invest in gold in the previous years to come on board.
Malabar Gold & Diamonds’ Managing Director of International Operations, Shamlal Ahmed, underscored that people used trade-ins frequently. ”We implemented the ‘Malabar Promise’ where customers can exchange their old jewels for new ones and we give them back the original value for gold jewels This has been taken forward for diamond jewels also thus the diamond lovers also can update their fashion without the worry of the depleting value.”
A Market Unseen in Any Previous Generation
Currently, the high price trend in gold has just started, yet the previous episode of the high price was observed during the 2008-2011 Global Financial Crisis, which reached $1,900 per ounce. Nevertheless, that was short-lived and not for long did high oil price become a norm especially as from the year 2020.
Some analysts are forecasting a further slide in the price to the range of $2 000-$2 200 or so but most of them believe that there is still much more to go for gold.
Holding On to Gold
However, there is an evident increase in the trade-in frequency, many customers decide to keep gold as a traditional and long-term commodity. Ramesh Kalyanaraman, Executive Director of Kalyan Jewellers added that though there has been a rise in the number of enquiries of gold rate and buy back value, at the same time, there has been a large number of people saying they want to hold gold. ‘This is acknowledging that gold is a safe haven investment instrument; people are coming in to buy gold what say at $2,500 for the first time.
