UAE gold demand: High prices, India duty cut impact 2024 jewellery demand
India’s decision in July 2024 to slash the import duty on gold – from 15% to 6% - did have an impact on jewellery demand in the UAE to a degree. That along with ever increasing prices of gold during 2024 led to a 13% drop in jewellery sales in the UAE in 2024, according to the latest report by World Gold Council.
All through 2024, UAE jewellery demand totaled 34.7 tonnes, well down from the 39.7 tonnes a year ago. Even in the typically busy fourth quarter, when Diwali and end of year buying takes place, UAE jewelley sales came to 8.8 tonnes from 10.3 tonnes in Q4-2023, which is a 14% dive.
Today, gold prices are accelerating even higher, at $2,859 an ounce from $2,814. The UAE gold rate is at Dh320.5 for a gram of 22K against Dh317.5 yesterday.
During 2024, gold prices saw as many as 40 ‘record highs’ as the metal broke through $2,200 to $2,700 levels. Gold became the ultimate safe haven asset to have, which was reinforced by world’s central banks adding more bullion to their holdings.
India’s cut
The decision by the Indian government on dropping import duty mean the significant price difference between buying gold in UAE and in India reduced considerably for Indian residents from the second-half of 2024. The decision was done with an eye to cub entry of smuggled gold into the country, and the duty drop meant those engaged in these grey market activities were not getting the same returns from the high risks they were taking.
But it did end up impacting on Indian visitors to the country buying less of gold from here.
“The duty cut ensured gold demand in India was not impacted by high prices to the extent seen in other key markets, including China, UAE and wider Middle East,” said Andrew Naylor, Head of ASEAN markets and Public Policy at London-headquartered World Gold Council. “Plus, there was Indian economy’s higher growth that too supported gold buying.”
As gold soars, UAE investors are switching to alternate means to make full use of the price gains. Last year, they piled into bars and coins and continuing a habit many picked up during 2023. Digital trading platforms were instrumental in winning over these investors.
“From high networth individuals to smaller retail investors, gold became part of their portfolio,” said Naylor.
Source: https://gulfnews.com/