With demand for yellow jewellery in Dubai and the other emirates soaring by double digits to reach about 50 metric tonnes in 2022, the UAE is leading the Middle East region in gold sales.
According to the most recent information from the World Gold Council, customers purchased 46.9 metric tonnes of gold jewellery in the UAE from January to December 2022, an increase of 38% from the same time in 2021 (WGC).
The UAE used the most gold in the Middle East in 2022, surpassing Saudi Arabia’s demand, which totalled 37.9 metric tonnes, Egypt’s (33.6 metric tonnes), and Kuwait’s (14.7 tonnes).
The UAE’s demand for jewellery exceeded that of other Middle Eastern nations, with 27.5 tonnes in the overall market.
A Regional Need
Higher than in the Americas (187.8 tonnes), Europe (70.6 tonnes), and other Asian nations, except significant markets like China, which recorded 598.3 tonnes, and India, the demand for gold increased by 15% year over year in the Middle East, reaching 190.4 tonnes (600.4 tonnes).
“Significant advances in the UAE and Saudi Arabia were major factors in the area’s performance. However, growth slowed in the fourth quarter, primarily due to the high and growing gold price,” said the World Gold Council.
One of the largest gold consumers in the world, India has a sizable ex-pat community in the United Arab Emirates. Additionally, foreign buyers of gold make it their preferred location.
Global Trends In Demand
While global jewellery consumption decreased slightly by 3% to 2,086 metric tonnes, primarily due to price hikes in the fourth quarter of 2022, it remained popular in the UAE.
Without over-the-counter sales, total annual gold demand increased by 18% to 4,741 metric tonnes in 2022, matching 2011. Demand for gold bars and coins increased by 2% to 1,217 tonnes, while investment demand increased by 10% to 1,107 tonnes.
Purchases by central banks last year totalled 1,126 metric tonnes, which was the most significant amount in 55 years.
Gold prices rose, reaching USD 2,000 per ounce in February 2022 as Russia started a war with Ukraine. A few months later, prices fell by more than 20% as a result of the aggressive monetary policy of the US Federal Reserve and the strong US currency.
However, prices have been rising since October 31, 2022, from about USD 1,639 an ounce about three months earlier to over USD 1,924 an ounce at the end of January.
Demand For Diamond Jewellery Increases
As per a recent Khaleej Times report, while the demand for traditional jewellery still holds good, gold jewellers in Dubai are seeing a demand increase for diamond jewellery and alternative metals such as platinum, silver, rose gold, and white gold among young consumers.
Gold jewellers in Dubai said that personalised designs were also becoming a vogue among shoppers in the post-COVID period.
Kalyan Jewellers Executive Director Ramesh Kalyanaraman stated that the younger consumers’ jewellery preferences are consistently evolving, influenced by affordability, minimalism, cultural trends and the growing popularity of all-season jewellery.
“This has led to a notable shift in consumer preferences towards alternative metals such as platinum, silver, rose gold and white gold as well as luxury products such as diamonds studded with emerald, sapphire or ruby,” Ramesh Kalyanaraman said.
Bafleh Jewellers Director Chirag Vora stated that the year 2022 saw a lot of demand for smaller jewellery with different colours of gold such as rose, yellow and white.
“Tricolor or multicolour gold jewellery is in trend now. People also like a dash of Minakari work,” he remarked.
Jewellery sales picked up in 2022 on the back of the recovery in the economy and the massive increase of tourist inflows, as many retailers reported double-digit growth in numbers. They also confirmed that gold jewellery sales reached the pre-pandemic level in 2021.
John Paul Alukkas, managing director, international operations, Joyalukkas Group, said that while the demand for traditional jewellery still holds good, there was a shift in preference for bold patterns, especially from the younger customers.
“There is also a preference for diamond jewellery in addition to jewellery with precious stones. Personalised designs are also becoming a vogue. Fine jewellery and fashion jewellery will be the preference in the coming years,” John Paul Alukkas added.
Shamlal Ahamed, Managing Director-International Operations, Malabar Gold & Diamonds, remarked that customers preferring diamond jewellery over gold jewellery is one of the most significant trends emerging in the market.
“There has been a steady increase of millennials amongst our customer base, preferring to buy trendy and lightweight jewellery in the lifestyle category as opposed to heavy pieces. Investment in gold has also shot up amongst both young and old investors due to gold continuing its position as a safe-haven investment,” he said.