The decrease in gold jewelry purchases by tourists in the UAE during the summer holiday is offset by an increase in sales from expat residents who buy precious metal jewelry for gifts, festivities, and lower local rates as they travel back to their home countries for the season break. Summer is a peak outbound travel season in the UAE, with many people going abroad to their home countries or cooler destinations in Europe, the US, and Asia. The growing population of the UAE, particularly of Asian expatriates, significantly contributes to the growth in sales of gold jewelry.
"Jewelry is a value-appreciating gift, making it a popular purchase for residents traveling back to their home countries. Dubai also offers consumers a wide range of designs from around the globe. Additionally, with gold prices in Dubai being 10-15 percent lower than in countries like India, it makes financial sense for expats to buy jewelry here. Furthermore, traveling back home often involves participating in festivities and cultural celebrations, where wearing jewelry is an essential part of the tradition," said Shamlal Ahamed, managing director for international operations at Malabar Gold and Diamonds.
Ahamed noted that the significant increase in sales usually continues until mid-July, and then sales pick up again towards the end of August ahead of the festive season. John Paul Alukkas, managing director of Joyalukkas Group, mentioned a noticeable trend among expatriates to purchase more gold jewelry while visiting their home countries in summer. "This inclination is often motivated by favorable gold prices here compared to their host country, along with potential tax advantages and exemptions. Hence, expats may take advantage of this," said Alukkas.
Echoing his peers, Anil Dhanak, chairman and managing director of Kanz Jewels, said expatriates purchase gold jewelry before they head back to their home countries for their annual vacations to present gold as gifts for family and friends or as a secure investment. World Gold Council's data for 2023 showed demand for gold jewelry in Q3 stood at 9.2 tonnes compared to 9.7 tonnes in Q1, 10.6m in Q2, and 10.3 in Q4. Gold jewelry buying by tourists during summer slows down due to fewer visitors coming to the country. But sales pick up during the festival season and winter.
Shamlal Ahamed mentioned that summer is the peak travel period for expats due to school holidays, and the major share of their jewelry sales during this period comes from resident customers. Gold jewelers shared mixed reactions in terms of jewelry sales in the current summer season. "We've observed a notable uptick in gold jewelry sales this summer compared to past seasons. This is a good sign for jewelry retailers as well as the economy because it indicates a rise in purchasing power. This surge can be attributed to several factors: heightened tourist influx, increased celebrations like weddings and festivals, and a broader economic recovery fostering consumer confidence and expenditure. It is safe to say that we are in the golden era of jewelry," said John Alukkas.
He added that there was a healthy mix of residents and tourists who contributed to gold jewelry sales during the summer. Anil Dhanak said despite the changes in summer season dynamics, gold jewelry sales have not picked up this year. "In fact, sales are down compared to the same period last year due to various factors, including economic conditions and fluctuating gold prices." He added that during this summer, the primary buyers of gold jewelry are Asians.
