In Dubai's Gold Souk, bullion's record run brings little joy for jewellers
Yet with bullion prices hitting record highs above US$3,400 (RM14,909) an ounce, there are signs of change, as buyers look to diamonds and lighter gold jewellery, instead.
While US tariffs and other factors have added fire to already hot demand for gold as an investment, the impact is different for gold jewellery, according to Andrew Naylor, head of Middle East and Public Policy at the World Gold Council (WGC).
'In markets like Dubai, this creates a two-fold effect: on one hand, you see stronger interest in gold as a safe-haven asset, on the other, high prices dampen jewellery demand.'
At Dubai's Gold Souk, retailers told Reuters they are seeing this trend, as current prices prompt shoppers to look for alternatives.
'There are no potential customers nowadays because of the gold prices,' said Fahad Khan, a sales representative at retailer Damas Jewellery.
'It's a little bit tough to afford gold, so I think it's better to go with diamonds,' said Lalita Dave, 52, as she browsed around the Gold Souk.
Lab-grown diamonds
Dubai has been a magnet for gold buyers for at least 80 years, starting with Iranian and Indian traders, both cultures sharing a tradition of 22-karat jewellery for adornment and investment.
Yet as gold prices rose 27 per cent last year, demand for gold jewellery in the UAE fell by around 13 per cent, outpacing an 11 per cent drop globally, according to the WGC.
Jewellery demand could face further pressure across key regions in 2025 if gold prices remain elevated or volatile, the WGC said in its gold demand trends report published in February.
Price swings, more than price levels, are increasingly shaping consumer behaviour, particularly in India, it noted.
Shifts in Indian purchasing patterns often ripple through Gulf markets such as the UAE, where buyers are a key driver of sales.
Jewellery is displayed at Emirates Diamonds Jewellery, in Dubai's Gold Souq, Dubai, United Arab Emirates, April 17, 2025. — Reuters pic
Goldman Sachs recently raised its end-2025 gold forecast to US$3,700 per ounce and said prices could climb as high as US$4,500.
'Higher gold prices are likely to dampen demand for jewellery, in a classic example of how the best cure for high prices is high prices,' said Russ Mould, investment director at AJ Bell.
One sign of economising has been the rise of lab-grown diamonds.
India exported US$171 million worth of lab-grown diamonds to the UAE in 2024, up almost 57 per cent from US$109 million two years earlier, data from the Gem and Jewellery Export Promotion Council showed.
India's exports of cut and polished diamonds to the UAE in the April–November 2024 were up 3.7 per cent.
UAE ranked third in global diamond imports in 2023, trade data shows, its primary trade partners including India, South Africa, and Belgium.
While the UAE accounted for just 1.5 per cent of the global diamond jewellery market by revenue in 2023, it is projected to grow by 5.9 per cent annually to reach nearly US$2 billion by 2030, according to Grand View Research.
That outpaces the global growth forecast of 4.5 per cent and makes the UAE the fastest growing market in the Middle East and Africa.
Trade tensions
One impact from recent trade tensions with the US has been accelerated talk about finding alternative markets and production hubs, two executives at major Indian diamond exporters told Reuters.
If tensions persist, potentially spanning years, one of the sources speaking to Reuters on condition of anonymity said his company's contingency plans included shifting some Indian production overseas, including to the UAE.
Shamlal Ahamed, managing director of international operations at retailer Malabar Gold & Diamonds, told Reuters the rise in lab-grown diamond jewellery sales in the UAE appeared to be driven more by design preferences than pricing and he remained bullish on gold jewellery demand.
'While price-conscious buyers may wait for a dip, our experience shows that such declines are often short-lived, with buyers quickly adapting to new price levels.' — Reuters
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
18 minutes ago
- The Star
Microsoft alerts businesses, governments to server software attack
WASHINGTON (Reuters) -Microsoft has issued an alert about "active attacks" on server software used by government agencies and businesses to share documents within organizations, and it recommended security updates that customers should apply immediately. The FBI on Sunday said it is aware of the attacks and is working closely with its federal and private-sector partners, but offered no other details. In an alert issued on Saturday, Microsoft said the vulnerabilities apply only to SharePoint servers used within organizations. It said that SharePoint Online in Microsoft 365, which is in the cloud, was not hit by the attacks. The Washington Post, which first reported the hacks, said unidentified actors in the past few days had exploited a flaw to launch an attack that targeted U.S. and international agencies and businesses. The hack is known as a "zero day" attack because it targeted a previously unknown vulnerability, the newspaper said, quoting experts. Tens of thousands of servers were at risk. Microsoft did not immediately respond to a request for comment. In the alert, Microsoft said that a vulnerability "allows an authorized attacker to perform spoofing over a network." It issued recommendations to stop the attackers from exploiting it. In a spoofing attack, an actor can manipulate financial markets or agencies by hiding the actor's identity and appearing to be a trusted person, organization or website. Microsoft said on Sunday it issued a security update for SharePoint Subscription Edition, which it said customers should apply immediately. It said it is working on updates to 2016 and 2019 versions of SharePoint. If customers cannot enable recommended malware protection, they should disconnect their servers from the internet until a security update is available, it said. (Reporting by Timothy Gardner in Washington; Editing by Frank McGurty and Leslie Adler)
The Sun
18 minutes ago
- The Sun
European powers set for fresh nuclear talks with Iran amid tensions
BERLIN: European powers are preparing for fresh talks with Iran regarding its nuclear programme, marking the first diplomatic engagement since the US attacked Iranian nuclear facilities last month. A German diplomatic source confirmed that Britain, France, and Germany, collectively known as the E3, are coordinating with Tehran to schedule discussions in the coming week. The E3 recently warned of reactivating international sanctions if Iran refuses to return to negotiations. Iran's Tasnim news agency also reported that Tehran agreed to hold talks with the three European nations, though details on the timing and location remain under discussion. 'Iran must never be allowed to acquire a nuclear weapon. That is why Germany, France and the United Kingdom are continuing to work intensively in the E3 format to find a sustainable and verifiable diplomatic solution to the Iranian nuclear programme,' the German source said. Tensions escalated after Israel launched surprise strikes on Iranian military and nuclear sites in June, followed by US attacks on Iran's uranium enrichment facility at Fordo and other nuclear locations. These developments disrupted earlier negotiations mediated by Oman. Meanwhile, Russian President Vladimir Putin met with Ali Larijani, a top adviser to Iran's supreme leader, to discuss regional stability and the nuclear standoff. The Kremlin stated that Putin reiterated Russia's stance on resolving the crisis diplomatically. The 2015 Joint Comprehensive Plan of Action (JCPOA), which imposed restrictions on Iran's nuclear activities in exchange for sanctions relief, has been under strain since the US withdrew in 2018. European nations have threatened to trigger the deal's 'snapback' mechanism to reimpose sanctions if Iran fails to comply. Iranian Foreign Minister Abbas Araghchi dismissed the threat, stating that Europe lacks legal or moral grounds for such action. However, the German source maintained that 'if no solution is reached over the summer, snapback remains an option for the E3.' Iran has also ruled out new talks with the US if they demand an end to uranium enrichment.
The Sun
an hour ago
- The Sun
UK consumer confidence drops sharply for first time in 3 years
LONDON: British consumer confidence suffered its steepest drop in nearly three years last quarter as concerns over job security and persistent inflation weighed on sentiment, according to a Deloitte survey released on Monday. The consumer confidence index fell by 2.6 percentage points to 10.4% in Q2 2024, the lowest level since early 2024. This marks the first significant decline since Q3 2022, when inflation surged to double digits and financial markets reacted negatively to former Prime Minister Liz Truss's budget plans. Deloitte noted that a minor 0.2-point dip last year was not statistically significant. 'Consumers are increasingly worried about job security and income growth due to signs of a slowing labour market,' said Celine Fenech, Deloitte's consumer insight lead. 'High living costs and inflation have also hurt sentiment around personal debt.' Businesses attribute hiring hesitancy to rising employment taxes, an increased minimum wage since April, and stricter dismissal laws for new employees. Recent official data showed unemployment climbing to 4.7% in May, the highest since 2021, while inflation rose to 3.6% in June. Deloitte's findings contrast with GfK's long-running consumer sentiment survey, which improved last month to its highest since December. Deloitte's survey, conducted among 3,200 consumers between June 13 and 16, measures sentiment across job security, income, debt, and general wellbeing. Despite a 3.9-point rise in economic outlook, the balance remains 18.4 points lower than a year ago. 'The UK economy has slowed, but business confidence remains resilient amid global uncertainties,' said Deloitte chief economist Ian Stewart. - Reuters
