UAE: The reason why expats purchase gold jewelry before embarking on summer holidays.
The decrease in gold jewelry buying by tourists in UAE over the summer is offset by expat residents purchasing precious metal jewelry for gifts and festivities, taking advantage of lower local prices before heading back to their home countries for the season break.
Summer is a popular time for travel in the UAE, with many residents heading to their home countries or cooler destinations in Europe, the US, and Asia. The increasing number of residents in the UAE, particularly Asian expats, significantly boosts the sales of gold jewelry.
Jewelry is a gift that increases in value, which is why it is a common choice for residents shopping before returning to their home countries. Dubai also offers consumers a wide range of designs from various parts of the world. Furthermore, expats find it financially advantageous to purchase jewelry in Dubai due to gold prices being 10-15 percent lower compared to countries like India. Moreover, going back to one's homeland frequently includes taking part in traditional events and cultural festivities, where adorning oneself with jewelry is a crucial aspect of the custom," noted Shamlal Ahamed, who serves as the managing director overseeing international operations at Malabar Gold and Diamonds.
Ahamed noted that there is a significant rise in sales which typically lasts until the middle of July, after which sales increase again towards the end of August in preparation for the festive season.
According to John Paul Alukkas, who is the managing director of the Joyalukkas Group, expatriates have been showing a clear trend of buying more gold jewelry when they go back to their home countries during the summer.
The motivation behind this tendency is frequently driven by the more favorable gold prices in this location compared to their home country, as well as possible tax benefits and exemptions. Alukkas stated that expats could benefit from this opportunity.
In agreement with his colleagues, Anil Dhanak, who serves as the chairman and managing director of Kanz Jewels, mentioned that expatriates often buy gold jewelry before returning to their home countries during their yearly vacations, either as gifts for loved ones or as a safe investment.
According to the World Gold Council's data for 2023, the demand for gold jewelry in Q3 was 9.2 tonnes, which was lower than the 9.7 tonnes in Q1, but higher than the 10.6 tonnes in Q2 and 10.3 tonnes in Q4.
There is a decrease in gold jewelry purchases by tourists in the summer because fewer people are visiting the country. However, there is an increase in sales during both the festival season and winter.
Shamlal Ahamed explained that expats tend to travel more during summer because of school holidays, and their jewelry sales peak during this time mainly from resident customers.
Sales during the summer have received contrasting responses:
Opinions among gold jewelry retailers on summer jewelry sales were varied.
We have noticed a significant increase in sales of gold jewelry this summer in comparison to previous seasons. This is a positive indicator for jewelry sellers and the economy as it suggests an increase in buying ability. The increase can be credited to various reasons: more tourists coming in, more events such as weddings and festivals, and a stronger economy boosting spending and confidence among consumers. John Alukkas stated that we are currently experiencing the golden age of jewelry.
He also mentioned that a balanced combination of locals and visitors boosted gold jewelry purchases in the summer.
Despite the variations in summer season trends, Anil Dhanak stated that gold jewelry sales have not seen an increase this year. Indeed, there has been a decrease in sales in comparison to the previous year's same time frame due to factors such as economic situations and gold price fluctuations.
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