UAE Buyers Look Beyond Jewellery as Gold Hits New Heights

Gold’s upward trajectory in the UAE is reshaping consumer behaviour, with rising prices shifting the market’s balance away from traditional jewellery purchases toward more affordable and strategic alternatives. Demand for ornamental gold continues to wane even as the metal remains highly prized for investment.

Gold jewellery sales across the UAE plunged to their lowest in over two years during April to June 2025, at 7.7 tonnes—down 16 per cent compared with the same period in 2024. This marks a continuation from an 18 per cent drop in the first quarter, according to industry figures. Even steep discounts on making charges and 18-karat offerings have not stemmed the decline.

Rising bullion prices present a paradox. The price spike has pushed many consumers to reconsider purchasing gold jewellery—yet it remains compelling as a store of value. In Dubai’s Gold Souk, traditionally a hub for 22-karat gold, high costs have driven shoppers toward diamonds and lighter designs. As one salesperson put it, “There are no potential customers nowadays because of the gold prices,” while another shopper remarked, “It’s a little bit tough to afford gold, so I think it’s better to go with diamonds”.

Jewellers themselves have adapted with a range of incentives in a bid to keep sales afloat. Measures include reduced making charges, lightweight collections, flexible payment schemes, exchange offers and loyalty programmes. Some of the more aggressive tactics—such as offering 0 per cent making charges—for older jewellery collections appear sporadically, though retailers caution against making such offers standard practice, citing the unsustainable strain this places on manufacturing and craftsmanship.

The shift in consumer spending clearly signals a broader realignment. Evidence shows that demand for gold bars is rising. With no VAT applied and the advantage of minimal or no making charges when reselling, bars have become an attractive investment vehicle. A market analyst observed that while jewellery demand fell, gold bars were the only category to record growth in the first half of 2025.

Global dynamics also underscore this trend. Record gold prices—surpassing $3,400 per ounce—reflect mounting safe-haven demand driven by macroeconomic and geopolitical uncertainty. Meanwhile, investors and policymakers anticipate more volatility, compelling buyers to favour forms of gold that minimise cost burden and maximise liquidity.

With demand for jewellery faltering, the diamond market in the UAE is gaining ground. Sales of lab-grown diamonds have surged—increasing by nearly 57 per cent in exports from India to the UAE between 2022 and 2024. Forecasts suggest the UAE diamond-jewellery market will grow at nearly 6 per cent annually, outpacing regional and global averages.

The dichotomy unfolding—from gold’s place of adornment to financial asset—underscores the evolving role of the metal in the UAE. Though jewellery remains culturally significant, current pricing pressures have shifted both consumers and retailers toward lighter, more affordable options, flexible payment mechanisms and alternatives like diamonds and bullion. The divergence suggests that while gold continues to command respect as a hedge, its traditional allure as jewellery is facing a substantive recalibration.