The demand for gold jewelry in the UAE has declined for the second consecutive quarter in 2024, primarily due to the elevated global prices of precious metals. The World Gold Council reports a decrease in demand for yellow metal jewelry, from 10.3 tonnes in the fourth quarter of 2023 to 9.6 tonnes in the first quarter of 2024, and further to 9.2 tonnes in the second quarter. Data indicates a 13 percent year-on-year drop in gold jewelry demand to 9.2 tonnes during the April-June 2024 period, down from 10.6 tonnes in the same period last year. Gold prices have surged to record levels, with the 24K variant surpassing Dh300 per gram. As of Monday, the prices for 24K, 22K, 21K, and 18K were Dh289.5, Dh268.0, Dh259.5, and Dh222.5 per gram, respectively. On Tuesday morning, spot gold traded at $2,384.09 per ounce, with prices recently crossing $2,400 per ounce.
Andrew Naylor, the head of Middle East and public policy at the World Gold Council, attributes the decline in UAE jewelry demand mainly to the high international gold prices, which are mirrored in the local market. He notes that gold demand is highly sensitive to price fluctuations, and when prices are high, demand typically decreases. Additionally, unique factors in the UAE, such as unprecedented floods in April, also impacted gold jewelry sales. The reliance on tourist trade has also affected demand, as Dubai is a significant international hub for jewelry purchases.
The drop in gold jewelry demand in the UAE mirrors global trends, with a 19 percent year-on-year decline to 390.6 tonnes. Overall consumer demand in the UAE fell by 11 percent year-on-year to 11.8 tonnes during the second quarter. High prices also affected gold bars and coins demand, which dropped by 5 percent year-on-year to 2.6 tonnes. Louise Street, a senior markets analyst at the World Gold Council, explains that the rising and record-breaking gold prices have been supported by strong demand from central banks and the over-the-counter (OTC) market. The OTC market has seen continued interest from institutional and high-net-worth investors, as well as family offices, for portfolio diversification. Conversely, jewelry demand has suffered as prices continue to rise, prompting some retail investors to take profits.
The World Gold Council’s Q2 2024 report highlights a 4 percent year-on-year increase in total global gold demand to 1,258 tonnes, marking the strongest Q2 ever, supported by a 53 percent year-on-year increase in healthy OTC transactions to 329 tonnes.
