UAE: Shoppers prefer lightweight gold jewelry amid high prices
Gold prices are soaring and it's affecting sales. Investors, notably from Asia, are waiting it out.
UAE's manufacturers are shifting gears, making more lightweight gold jewelry. The demand for such baubles is up, with costs reaching record highs in Dubai.
Executives in the field tell us that buyers are choosing lower weight precious metal jewelry, under 15 grams.
It seems people aren't willing to splurge on gold pieces right now. The high cost of gold has reportedly affected sales. Investors, particularly those from Asia, are currently holding off on purchases.
Gold is doing well. For several months, its price in Dubai hit a record Dh322.75 per gram. It was a Wednesday night. Other types, 22K, 21K and 18K sold for Dh298.75, Dh289.25, and Dh248 a gram.
Spot gold went up 0.25 per cent, valued at $2,664.68 per ounce. What boosted prices? People predicted more interest rate slashes, Middle East turbulence, and a flux of money into exchange-traded funds.
Up to 15 per cent drop in sales
"The hike in gold prices shocked all, leaving a deep impact on the market. A month ago, a product held a certain price, but now it's skyrocketed by 30 percent. This spike affected all in the trade, heavily hitting the wholesale business. Generally, the effect was significant, around 10-15 percent."
He noted a significant shift in the jewelry business over the past ten years, particularly related to weight.
Jewelry made a decade ago was heavier - but that's changed these days due to cost factors. Now, if a jeweler makes a 20-gram ring, it's likely nobody would buy it. So, every jewelry maker is now pivoting to produce lighter pieces.
Not stretching budgets
John Paul Alukkas, head of Joyalukkas Group, noticed a rise in lightweight gold jewelery's popularity in the UAE.
He says, "We've observed that as the cost of gold increases, clients hunt for cheaper alternatives. Nowadays, these fashion items are quite a hit with those who love jewelry. They catch the fancy of modern, fashion-forward customers who aim to own gold without a big hit on their wallets."
Alukkas acknowledged the surge in demand has urged makers to spotlight more on lightweight jewelry.
As per the evolving likes of consumers and financial conditions, they've adjusted by making fresh, complex patterns that require less gold, all while holding their top-grade quality. Their objective is to provide affordable yet elaborate designs so that customers can still acquire skillfully created pieces, even with gold prices being high," he said.
5-15 gram pieces in demand
John Paul Alukkas highlighted an increase in preference for 5 to 15-gram jewelry pieces.
He explained, “This weight range best combines style, cost-effectiveness, and class, making it a top pick among our shoppers. Clients value that they can still savor gold's elegance without doling out a huge sum for heftier items. This trend is evident in different jewelry types, such as necklaces, bracelets, and rings. Lighter designs remain in demand by those seeking regular elegance,” the Joyalukkas Group's managing director stated.
Shamlal Ahamed, the one in charge of international affairs at Malabar Gold and Diamonds, shared that even though high gold prices have impacted people's interest in lightweight jewellery, these hiking prices emphasize gold's nature as an asset that increases in value. As such, customers can benefit from buying more gold.
"Helping customers enjoy the holiday season, we've launched a '10% upfront pay' deal. It lets you lock in today's gold prices by paying only 10% now. Over 300,000 buyers have gained from this scheme. It guarantees that they purchase jewellery at the pre-set price when costs go up, or reap the benefits of falling prices if they go down," he stated.
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