Gold rush in Dubai continues to attract all nationalities including Pakistanis

As bullion prices hit record highs in recent weeks, retail demand may have dampened, but traders in Dubai are confident that sales will continue to thrive in the ‘City of Gold’.

Pakistanis and Indians – long seen as stellar source markets – have also traditionally flocked to the emirate to buy gold, but even as rates hit new peaks, their buying preferences have remained undeterred.

Traders in Dubai helped single out the reasons that attract buyers.

“Gold is appealing in Dubai due to the variety on offer, tax-free shopping and the promise of authenticity,” said a vendor with Damas Jewellery, a group founded in 1907 and among the most recognisable brands in the Middle East.

“We carry collections from European designers, Turkey, and others. We have had Pakistani customers looking to authenticate gold bought from back home that was sold to them as 21 carat, which we discover is not more than 14 or 16 carats. This would never happen in Dubai.”

Variety and authenticity, then, seem to go a long way.

Abdullah Abdul Razzak Chand, vice president of All Pakistan Gems and Jewellers Sarafa Association (APGJSA), had a similar sentiment.

“There is a world of a difference between the variety offered in Dubai and Pakistan,” Chand told Business Recorder.

“Customers prefer to shop there due to the more extravagant collection on offer. These (designs) are simply not made in Pakistan.

“We import mainly from wholesalers in Dubai, with varieties from Singapore among them, which consumers in Pakistan prefer.”

Chand said the gold rate in Pakistan is currently a bit lower than the rate in Dubai, but sales continue to be depressed.

“The gold rate in Pakistan is approximately Rs 4,000-5,000 less than the price in Dubai, and yet we are experiencing depressed sales due to low purchasing power and high inflation.”

Buyer preferences

Dubai’s reputation as the ‘City of Gold’, meanwhile, is not just for nothing.

Despite geopolitical uncertainty in the Middle East driving up the price of gold, industry executives are confident that the drop in sales is temporary — owing to its status as a solid investment.

“The upward trend in gold prices is certainly influencing retail buying patterns,” Tawhid Abdulla, Chairman of Dubai Jewellery Group, told Business Recorder.

“However, occasions like Eid and other celebrations continue to drive positive sales as jewellery remains an integral part of family traditions and cultural practices.

“Despite record high gold prices, we have observed reasonably good sales.”

Dubai’s international population adds to this continued demand.

“Dubai’s retail jewellery sector caters to over 180 nationalities residing in the city with jewellery imported from over 30 countries, thus meeting demand from global tourists.”

The 24-carat conundrum

Gold jewellery in Dubai comes in varieties of 18 carat, 21c, 22c up to 24c, catering to the tastes and preferences of every region in the world.

“Prior to Covid-19, we would see more Russian and Chinese customers,” said the Damas vendor.

“These days, we see more clients from Europe, South Africa, Brazil, who are not too concerned about gold prices, but rather its quality and variety.”

Damas Jewellery also stocks designer collections such as Fope, Roberto Coin, Marco Bicego, which are popular among this roster of clients.

“These designs are offered in Europe or the US in 14-carat with additional taxes levied on it. Therefore, Dubai remains a preferred market.”

Additionally, these global clients are also drawn by the favourable tax refund offered by the UAE, while 21-24 carat jewellery remains more popular with Asian customers, especially from economies that see more domestic turbulence.

“Customers from Pakistan are mostly buying gold bars – half a kg or 1 kg. Customers are not deterred by the prices because those who want to buy gold will still buy it – no matter the market dynamics,” he added.

Meanwhile, buying preferences of the local UAE customers are entirely varied.

“Customers within the UAE are an entirely different breed of customer and are interested mainly in 21-carat jewellery.

“They buy dresses for women made entirely of gold, and deal in kilogrammes such as 5 kg, 10kg — not grams.”

Dubai’s burgeoning growth

Across the Arabian Sea, Dubai’s economic growth, relaxed visa policies, stable real-estate market and transient population add to this demand.

“The city’s rapid growth and development are evident in its expanding skyline, infrastructure, and increasing number of international visitors,” said Abdulla.

For indeed, even during a gold rally the value of the commodity is unshaken.

“The upward trend in gold prices reinforces consumer confidence, leading many to purchase gold as a secure investment,” added Abdulla.

“This sentiment transcends most nationalities, as people from diverse backgrounds view gold as a reliable store of value and a hedge against economic uncertainty.”

Copyright Business Recorder, 2024